Conservatives at Northamptonshire County Council have returned a vote of no confidence in their leader.
Councillor Heather Smith faced has faced a number of calls to resign over the past month after the county council issued a section 114 notice to halt all non-essential spending.
Last week, the council was told the budget it had proposed for the 2018/19 year was "unlawful" because of the way it planned to use sold assets to prop up day-to-day finances.
But Conservatives at County Hall have now issued the leader a vote of no confidence.
It means she will remain leader of the council, even though she is now no longer leader of the Conservative group.
Councillor Matt Golby, the former cabinet member for children’s services and education, has been installed as interim leader.
Group business leader for the Tories, Councillor Suresh Patel told the Chron: "It will be a sad loss.
"It's just that the county council is going through tough times at the moment.
"Backbenchers are looking for a fresh start."
It is understood Councillor Smith will remain as council leader until at least May.
The Labour group tried to pass a vote of no confidence against Councillor Smith in November, which was defeated.
Council rules mean there must be at least six months between no confidence votes.