Speaking on Dutch television, Balkenende confirmed that the Netherlands will stick to plans to pull out its 2,000 soldiers from Afghanistan in August.
"If nothing else takes its place, then it (the mission) ends," Balkenende said.
But the prime minister said he was worried about the impact of the withdrawal on the Netherlands' international standing.
"The moment the Netherlands says as sole and first country we will no longer have activities at the end of 2010, it will raise questions in other countries and this really pains me," he said.
His comments came a day after he told reporters that the center-left Labor Party was quitting the coalition government over a dispute on whether to extend the Netherlands' military mission in Afghanistan.
Balkende telephoned Queen Beatrix tendering the resignations of the ministers and deputy ministers of the Labour Party PvdA.
NATO urges Dutch to reconsider
In a first reaction to the collapse of the ruling coalition, NATO Saturday renewed its call for Dutch troops to remain in Afghanistan for an additional 12 months in a more reduced capacity in its military mission.
2,000 Dutch troops are currently stationed in the Uruzgan province.
NATO Secretary General Anders Fogh Rasmussen formally requested the Netherlands to assume a new training role earlier this month and postpone withdrawing its 2,000 troops this year when its current mandate expires.
But Alliance spokesman James Appathurai acknowledged that it was a decision the Dutch government had to reach.
"This is a Dutch discussion which NATO respects," Appathurai told AFP news agency.
But he added that NATO Secretary-General Rasmussen "continues to believe that the best way forward for the overall mission could be a new smaller Dutch operation after August 201O."
This new military mission would focus on the provincial reconstruction team in Uruzgan, with greater emphasis on training, he said.
"Whatever happens after that date the Afghan people can be sure that NATO will continue to support them for as long as necessary," Appathurai added.
No middle ground
On Saturday, Balkenende said the government's collapse after 16 hours of tough negotiations was a defeat for both parties. “We’ve experienced this failure both individually and collectively as a defeat. This doesn’t change anything about the facts or the conclusions we have reached,” he said.
Prime Minister Balkenende's Christian Democrat CDA party, the senior coalition partner, had floated the idea of keeping a smaller force in Afghanistan beyond this year's deadline.
Deputy Prime Minister Wouter Bos, whose Labor party wants the Afghan mission to end as soon as possible, had earlier promised "the last Dutch soldier gone from Uruzgan by the end of the year."
Prime Minister Balkenende said that he and his rival Bos simply couldn't reach a compromise.
"As the leader of the cabinet, I came to the conclusion that there is no common road for the CDA [Balkenende's party], the PvdA [Bos' party], and the Christian Union [junior partners] to take into the future."
Without Bos' Labor party, Balkenende's coalition does not have the outright majority required to rule in Holland.
The Netherlands' military mission in Afghanistan began in August 2006, and has already been extended by two years. 21 Dutch soldiers have lost their lives in Afghanistan.
Meanwhile, protests were held in Berlin on Saturday in opposition to Germany’s ongoing troop presence in Afghanistan. German news agency DPA reported that between 600 and 2,000 demonstrators turned out to call for a recall of the country’s roughly 4,400 Bundeswehr troops stationed in the north of the country.
German Foreign Minister Guido Westerwelle (FDP) responded to the peaceful protests, organized by a number of left-wing political groups, warning that a withdrawal from Afghanistan would be a "significant threat" to European security.
On Friday, the lower German lower house of parliament, the Bundestag, will vote on whether to increase the number of German Bundeswehr troops serving in NATO-led ISAF mission to more than 5,300. The Green Party has announced that its parliamentary deputies will abstain in the vote.
Editor: Sonia Phalnikar