Anti-government protestors who had set up week-long blockades in Bangkok's two airports cheered the move and pledged to stop their protests.
"We've finished our duty," said Sondhi Limthongkul, leader of the People's Alliance for Democracy (PAD). "If a puppet government returns or a new government shows its insincerity in pushing for political reform, we will return."
Over the past week, yellow-shirted PAD members staged protests in Suvarnabhumi and Don Muang airports to show their opposition to Somchai's government. The protests stranded thousands of travelers, who in recent days began fighting with demonstrators.
Thailand's nine-member Constitution Court ruled that under the country's constitution, a party with a leader convicted of election fraud must be dissolved and all its leaders banned from politics for five years. The People Power Party (PPP) and two other parties in the governing coalition found guilty of fraud in the December elections were ordered to shut down.
But the ruling may just be a continuation of the country's political unrest as it raised fears of a backlash by pro-government supporters who held their own rallies wearing red shirts.
"The divisions are so deep, it's difficult to see how it could be over," Chulalongkorn University political analyst Giles Ungpakhorn told Reuters.
The same court dismissed Prime Minister Samak Sundaravej in September for accepting payments to appear on a cooking show, a violation of the constitution while in office.
Samak was also accused of being a pawn of exiled leader Thaksin Shinawatra, who is loved in rural areas but despised by the middle class and elite in Bangkok. Somchai, who was in power less than three months, is the brother-in-law of Thaksin.
"The verdict comes as no surprise to all of us," said former minister Jakrapob Penkair, a close ally of Thaksin. "But our members are determined to move on and we will form a government again out of the majority that we believe we still have," he told Reuters.
First Deputy Prime Minister Chavarat Charnvirakul was named interim leader, an official said according to Reuters. A new prime minster will be appointed when parliament meets again. All six parties in the coalition have agreed to seek a vote on Dec. 8.
Members of the dissolved party are expected to form a new party, called Puea Thai, set up before the ruling, the Los Angeles Times reported.