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Houthi Yemeni Shiites wearing army uniforms chant slogans during a rally to show support for their comrades in Sanaa, Yemen, on Feb. 4, 2015.

HANI MOHAMMED/ASSOCIATED PRESS

Yemen's powerful Shia rebels announced on Friday that they have taken over the country and dissolved parliament, a dramatic move that finalizes their months-long power grab.

The development also plunges the impoverished country deeper into turmoil and threatens to turn the crisis into a full-blown sectarian conflict, pitting the Iran-backed Houthi Shiites against Sunni tribesmen and secessionists in the south.

It could also play into the hands of Yemen's al-Qaeda branch, the world's most dangerous offshoot of the terror group, and jeopardize the U.S. counter-terrorism operations in the country.

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In a televised announcement from the Republican Palace in the Yemeni capital of Sanaa, the Houthi rebels said they are forming a five-member presidential council that will replace president Abed Rabbo Mansour Hadi for an interim two-year period.

The Houthis also said that "Revolutionary Committee" would be in charge of forming a new parliament with 551 members. The committee is the security and intelligence arm of the rebel group, led by Mohammed Ali al-Houthi, relative to the Houthis' leader, Abdel-Malek al-Houthi.

The statement in Sanaa, read by an unidentified announcer, claimed that it marked "a new era that will take Yemen to safe shores."

It comes after political parties failed to meet a Houthi-imposed deadline on Wednesday to agree on an acceptable way forward.

Houthis' rising dominance – which included a raid of the presidential palace and a siege of Hadi's residence – forced the president and all cabinet members to submit their resignations in January.

The announcement did not give a timetable for elections and gave no indication on the fate of Hadi.

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