The decision to hold the election on 29 November comes days after tens of thousands of people took to the streets in protest at the country’s housing in the wake of the forcible eviction of an 87-year-old woman.
The vote will be held on 29 November, and Sanchez made the announcement during a televised national address.
He argued that a broader progressive coalition would let the country tackle some of its biggest challenges.
Sanchez said: “The time has come, therefore, for the Spanish people to decide what future you want for yourselves and for your country.”
The demonstrations also follow the failure of the government to pass emergency legislation to help renters.
Mr Sanchez’s Socialist Party is trailing in the opinion polls, so facing the electorate now could be a risky move.
His proposals to tackle a mounting housing crisis were well received but were struck down by right-wing MPs
on Friday.
He was hoping to ban evictions of vulnerable tenants until 2030, impose a two-year rent freeze extension for existing leases and introduce tighter rules for short-term rentals.
The opposition argued that the measures would exacerbate matters by reducing housing supply.
This breaking news story is being updated and more details will be published shortly.
Please refresh the page for the fullest version.
You can receive breaking news alerts on a smartphone or tablet via the Sky News app. You can also follow us on WhatsApp and subscribe to our YouTube channel to keep up with the latest news.
