The president of Vanuatu has dissolved the country's parliament just over halfway through the current four-year-term.

Nikenike Vurobaravu signed the instrument for the dissolution of parliament on Thursday afternoon on the eve of a proposed motion of no confidence in the prime minister that was to have been tabled on Friday morning.

The now caretaker prime minister Bob Loughman, who requested the dissolution, has welcomed the president's decision and called on all Vanuatu citizens to respect it.

The opposition leader Ralph Regenvanu said in a statement on social media he would be challenging the president's decision in court.

"The President of the Republic has dissolved Parliament on the advice of the Council of Ministers just hours before a scheduled motion of no confidence in the Prime Minister in an Extraordinary Parliamentary session called by the majority of Members. The majority of Members will be challenging this dissolution in court. - in Port-Vila," Regenvanu posted on the Vanuatu opposition's Facebook page.

However, Loughman is already in campaign mode saying by law they must hold an election in not less than 30 days but also not more than 60 days time.

"My responsibility and that of my ministers [is] to make sure that we run and we conduct an election for the people of this country to elect their new representatives to represent them in parliament," Loughman said.

"I had made an appeal earlier on that when it comes to selecting candidates, I appealed to all the communities to nominate and elect reputable leaders that have the qualities to lead this country," he said.