Speaking at a news conference in the southern town of Baidoa, where parliament is based, Hussein said he expected to name a new cabinet in the next two weeks.
"After meeting my ministers, I decided to form a new government," Hussein said.
"In that government, 50 per cent of the ministers will be selected from outside, while the other 50 per cent will come from the parliament."
Since his appointment late last month, Hussein has come under pressure to end the infighting that has paralysed Somalia's interim government for three years.
The cabinet he named on December 2 failed to win parliamentary approval after five officials quit in protest against what they saw as their clans' under-representation in the government.
Agencies
Somali PM dissolves cabinet
Somali Prime Minister Nur Hussan Hussein dissolved his cabinet on Sunday, barely two weeks after five senior officials quit in a power-sharing row.

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