The decision was made based on Article 155 of the Spanish Constitution to the Autonomous Community of Catalonia, Rajoy said, adding the cabinet will meet on Saturday to approve the measure, which will then be passed to the Senate for ratification, probably on October 27.
Rajoy took the bold steps with broad support from Spain's main political opposition, and will nearly certainly receive the required approval next week from the Spanish Senate, where his own conservative party holds a majority. On Oct. 1, thousands braved national police wielding truncheons to vote in a contentious independence referendum for Catalonia, even after it was declared illegal by the Spanish government and courts.
The plan, which still requires the approval of the upper house Senate, seeks to resolve Spain's worst political crisis in four decades but risks an angry reaction from independence supporters, who plan street protests later in the day.
Meanwhile, Rajoy has been attending a summit of European leaders in Brussels on Friday, explaining that the unrest in Catalonia is down to the "irresponsible decisions" of the local government there.
"Our objective is to restore the law and a normal cohabitation among citizens, which has deteriorated a lot, continue with the economic recovery, which is under threat today in Catalonia, and celebrate elections in a situation of normality", Rajoy said.
On Friday morning, people were seen lining up at CaixaBank branches and other bank branches in downtown Barcelona, majority withdrawing either 150 or 160 euros ($188) from ATMs.