Austria is bracing itself for fresh elections in September after a tumultuous weekend saw the country’s conservative-nationalist coalition government collapse over the so-called “Ibiza scandal”.

The country’s chancellor, Sebastian Kurz, announced on Saturday that his centre-right Austrian People’s party (ÖVP) would end its 18-month ruling coalition with the far-right Freedom party (FPÖ) following the emergence of a video, filmed in Ibiza, that appeared to show his deputy, Heinz-Christian Strache, offering lucrative public contracts in exchange for campaign support.

“Enough is enough,” Kurz said as protesters gathered outside his chancellory chanted the Vengaboys’ 1999 hit We’re Going to Ibiza!

Play Video 0:21 Protesters chant Vengaboys' We're Going to Ibiza! outside Austrian chancellory - video

On Sunday, Austria’s president, Alexander Van der Bellen, said the country’s parties needed to “rebuild trust” with the electorate and proposed holding the vote in early September.

“This new beginning should take place quickly, as quickly as the provisions of the federal constitution permit, so I plead for elections … in September,” he said, following a meeting with Kurz.

Neither Austria’s chancellor nor its president made clear how the country would be governed in the interim period. Opposition parties argue that a thorough investigation of the scandal could only be guaranteed if the Freedom party were to immediately vacate its posts, which include those at the interior and defence ministries.

On Friday afternoon, the German publications Der Spiegel and Süddeutsche Zeitung had published a video on their websites that shows Strache, the FPÖ leader, and his parliamentary leader, Johann Gudenus, talking to a unidentified woman purporting to be the niece of a Russian oligarch about how she could invest in Austria.

Play Video 2:25 Footage appears to show Austrian vice-chancellor promising contracts for campaign support – video

During the six-hour meeting at a luxury resort on Ibiza, 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 Freedom party in its election campaign.

A chain-smoking Strache is filmed saying the woman would then be able to gain access to artificially inflated state contracts. The 49-year-old, who has led the FPÖ since 2005, also states his intention to “build a media landscape similar to [Hungarian prime minister Viktor] Orbán’s”.

Both newspapers said they had no clear information about who had set up the elaborate sting operation, but the video had been authenticated by a number of experts.

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

Within 24 hours of the video’s release, Strache and Gudenus resigned from their posts. Holding back tears at a press conference on Saturday, Strache admitted his behaviour had been “stupid, irresponsible and a mistake”. He publicly apologised to his wife 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.

Facebook Twitter Pinterest Protesters at the One Europe for All anti-nationalist rally in Vienna on Sunday. Photograph: Lisi Niesner/Reuters

However, the former far-right leader also described the video as being part of a “targeted political assassination” aimed at breaking apart the coalition government, and said he had done nothing illegal.

Commentators in Austria predict that Kurz’s centre-right ÖVP is most likely to profit from the “Ibiza scandal”. The party’s lead candidate for the European elections, Othmar Karas, on Sunday ruled out another coalition government with the FPÖ.

But the scandal also raises unanswered questions about Kurz’s party, and the funding of Austria’s political landscape in general. In the video, Strache claims that there are “a couple of very wealthy people”, including the weapons manufacturer Gaston Glock, the department store heiress Heidi Goëss-Horten and the investor René Benko, who channel between €500,000 and €2m to political parties “through a nonprofit association”, “circumventing the court of audits”.

Benko, Strache says, donates “both to the FPÖ and the ÖVP”. Benko, Glock and Goëss-Horten have all since denied making donations to the Freedom party.