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Austria's Chancellor Sebastian Kurz has called for a snap election after the resignation of his vice chancellor over an alleged corruption scandal.

Heinz-Christian Strache resigned on Saturday after footage of him seeming to offer lucrative German contracts to a potential Russian benefactor was published in newspapers this week.

Mr Kurz said he could not reach an agreement with the leadership of Mr Strache's anti-immigrant Freedom Party on continuing forward with the coalition with his centre-right People's Party.

In a statement to the media, he said "enough is enough" and listed a number of lesser scandals involving the Freedom Party that have not triggered the fragile coalition to collapse.

He said he would propose to President Alexander Van der Bellen that a snap election be held as soon as possible.

Earlier on Saturday, Mr Strache told reporters he was set up illegally, and claimed the publication was a "political assassination".

But he did admit his behaviour in the video was "stupid, irresponsible and a mistake".

Mr Strache did say in his resignation statement that he was standing down so that the coalition could continue.

German newspapers Sueddeutsche Zeitung and Der Spiegel published parts of a covert video that allegedly showed Mr Strache offering government contracts to a woman from Russia, who was supposedly interested in investing large amounts of money in Austria.

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In the clip, Mr Strache and party colleague Johann Gudenus can be heard telling the woman she would get big construction contracts, in return for buying an Austrian newspaper and supporting the Freedom Party.

Sueddeutsche Zeitung and Der Spiegel said the footage was authenticated by a forensic video expert.

According to the newspapers, the video was recorded during a six-hour long drink-fuelled conversation at a villa in Ibiza.

The woman claimed to be the niece of a prominent Russian businessman.

As well as discussing investments, which included the sale of Austrian newspaper Kronen Zeitung, Mr Strache also suggested ways of funnelling money to his party through an unconnected foundation that would get around Austria's political donation rules.

Mr Strache said there was no more contact with the woman and there were on financial contributions.