Austria is heading for snap elections after the far-right vice-chancellor resigned over a video that appeared to show him promising public contracts to a woman posing as a Russian backer, in return for help in his election campaign.

The Austrian chancellor, Sebastian Kurz, said on Saturday that “enough was enough” and his conservative Austrian People’s party (ÖVP) was ending its 18-month-old coalition with the nationalist Freedom party (FPO). Elections would be held “as soon as possible”, Kurz said.

Kurz’s deputy, FPO leader Heinz-Christian Strache, earlier told a press conference he had been the victim of a “targeted political assassination” aimed at breaking apart the coalition government, and insisted he had done nothing illegal.

However, Strache admitted the secretly filmed footage showed him “acting like a teenager” and that his behaviour had been “stupid, irresponsible and a mistake”. Fighting back tears as he asked for forgiveness, he said that in the cold light of day, his remarks were clearly “catastrophic and exceedingly embarrassing”.

Kurz, who has repeatedly been forced to distance himself from the FPO after a string of recent revelations about extremist, antisemitic and racist sympathies in the far-right party, said that while he had not always commented publicly there had been “many situations where I had a lot of trouble tolerating the FPO’s behaviour.”

In meetings on Saturday with the FPO, he said, he “had not felt a readiness to change”. Since it was not possible to continue with the far-right party or form a new administration with the opposition Social Democrats, who reject his tax and debt-cutting agenda, he said, “I have informed the president of my wish to hold national elections.”

The German weekly Der Spiegel and the daily Süddeutsche Zeitung published the video on their websites on Friday. The papers said the recordings took place in a luxury Ibiza villa in July 2017, months before the parliamentary elections that brought Kurz’s conservative and Strache’s far-right parties to power.

The recordings show Strache, who took over as leader of the nationalist party in 2005, and the FPO’s parliamentary leader Johann Gudenus, who also resigned on Saturday, talking to an unidentified woman purporting to be the niece of a Russian oligarch about how she could invest in Austria.

The woman says she is interested in gaining control of the country’s largest-circulation tabloid, the Kronen Zeitung, to which Strache replies that after staff changes at the paper, it could help the FPO in its election campaign.

Strache is also filmed saying the woman would then be able to gain access to public contracts. Both newspapers said they had no clear information about who had set up the elaborate sting operation, but the video had been authenticated by experts.

The vice-chancellor’s apparent eagerness to accept Russian help raises further questions about the extent of the FPO’s longstanding ties to Russia. The far-right party has signed a formal cooperation agreement with President Vladimir Putin’s United Russia party.

Germany’s chancellor, Angela Merkel, said on Saturday that the continent was “confronted with currents... who want to destroy the Europe of our values”. Far-right parties rejected values like the protection of minorities and basic human rights, Merkel said, and “politicians being for sale also plays a role”.

Strache, 49, who will be replaced as party leader by his deputy, the transport minister, Norbert Hofer, apologised for flirting with the woman, whom he describes as attractive in the recording. “It was typical alcohol-fuelled macho behaviour in which, yes, I also wanted to impress the attractive female host,” he said.

Calling for early elections, the Social Democrats described the incident as Austria’s biggest postwar scandal. Hundreds of demonstrators gathered outside Kurz’s office, chanting “Snap elections now!” and “Sebastian, your government, your responsibility”.

Play Video 0:44 Protests in Vienna over secret footage of vice-chancellor – video

The FPO’s lead candidate in next week’s European parliament elections, Harald Vilimsky, cancelled a trip to Milan planned for Saturday, where he was due to take part in a campaign event launching an alliance of European far-right parties led by the Italian interior minister, Matteo Salvini.

The far-right party’s co-chair, Christian Hafenecker, said lawyers were considering the party’s response. Neither Strache nor the party received any benefits from the persons concerned, he said in a statement, adding that since the video was “obviously recorded illegally, we are also preparing appropriate legal steps”.

In the video, Strache, whose party’s first leader was a former SS officer, also ponders the part-privatisation of Austria’s public broadcaster, saying it should be more like the government-mouthpiece state media has become in neighbouring Hungary.

He also appeared to suggest political donations might be made through a foundation with links to the FPO, rather than the party itself, apparently in order to escape legal scrutiny.

Kurz’s options are limited because while his ÖVP tops opinion polls, it is well short of a majority in parliament. The only other party with which it could hope to form a majority government is the Social Democrat party, with which the chancellor has strained relations.