PARIS  - France was thrown into fresh crisis on Monday after President Francois Hollande told his prime minister to form a new government, following a high-profile show of insubordination by the country's firebrand economy minister.

It is the second reshuffle in just five months as the ruling Socialists struggle to pull France out of the economic doldrums and the party is riven by infighting over what direction to take to reduce sky-high unemployment and boost sorely-needed growth.

The shock move caught France by surprise and opposition figures pointed to a major crisis of confidence at the heart of the deeply unpopular executive, with far-right leader Marine Le Pen even calling for the lower house National Assembly to be dissolved.

A presidency statement said Prime Minister Manuel Valls had offered the resignation of his government - a formality that allows him to form a new cabinet - and the new line-up would be announced on Tuesday. "The head of state asked him (Valls) to form a team consistent with the direction he has himself set for the country," it said.

The presidency did not give any reasons for the shock move, but it came after Economy Minister Arnaud Montebourg bad-mouthed France's economic direction and the austerity policies of European powerhouse and ally Germany, angering Valls.

"You have to raise your voice. Germany is trapped in an austerity policy that it imposed across Europe," Montebourg said in an interview with Le Monde newspaper published Saturday.

Then in a speech on Sunday, Montebourg said he had asked Hollande and Valls for a "major shift" in economic policy.

"Given the seriousness of the economic situation, an economy minister has a duty to offer alternative solutions."

While it is as yet unclear whether Montebourg will remain in the government, it appears increasingly unlikely.

On Monday, Valls - who has consistently said he will not tolerate any insubordination from his ministers - was busy meeting every member of the former cabinet, including Montebourg.

The 51-year-old left-wing minister is no stranger to controversy, having made headlines in the past for his outspoken criticism of ally Germany, which he has blamed for factory closures in France.

He was promoted to his current position in April in a government shake-up after the Socialist party suffered a drubbing at local elections, and has had to cosy up to Finance Minister Michel Sapin who supports the very austerity measures that he disagrees with.

As industrial renewal minister before his promotion, he had grabbed headlines by labelling the head of tyre giant Titan an "extremist" after the CEO criticised the French workforce as lazy.

He also became embroiled in a very public fight with steelmaker ArcelorMittal over the closure of a plant.

The latest reshuffle comes at a time when France is mired in stubbornly slow economic recovery, with high unemployment.

The central bank warned this month that Hollande had no hope of reaching his target of 1.0 percent growth for 2014. The French economy has been stagnant for the past six months and the government was forced to halve its growth forecast to 0.5 percent for this year.

Both Hollande and Valls say the answer is their so-called Responsibility Pact that offers businesses tax breaks of some 40 billion euros ($55 billion) in exchange for a pledge by companies to create 500,000 jobs over three years.

Hollande plans to finance this with 50 billion euros in spending cuts, and the plan has angered those on the left of the party - including Montebourg - who argue that the focus should be on cutting taxes to boost consumers' spending power.

The prime minister himself, who veers more towards the centre, is also deeply unpopular with some Socialists.

Two Green ministers left the government when Valls was appointed in March after the Socialists' humiliation in local elections.

Frederic Dabi, deputy head of polling firm IFOP, said the reshuffle risked further weakening Hollande and restricting his support within the party.

"But I wouldn't overestimate the impact on public opinion," he said.

"We have a government and president that are historically unpopular, and what will make them popular or more unpopular isn't what happens in the government in terms of people but policies being implemented and a lack of results."