Prime minister Salaam Fayyad has resigned, leaving the Palestinians without one of their most moderate and well-respected voices just as the US is launching a new push for Middle East peace.
A statement from the official Palestinian news agency Wafa said President Mahmoud Abbas met Mr Fayyad late yesterday and accepted his resignation, thanking him for his service.
According to the statement, Mr Abbas asked Mr Fayyad to continue to serve in his post until Mr Abbas forms a new government. Mr Abbas was expected to name a new prime minister within days, according to Palestinian officials.
Mr Abbas and Fayyad had been locked in an increasingly bitter dispute over the extent of the prime minister's authority. Mr Fayyad offered his resignation on Thursday, but Mr Abbas did not respond to Mr Fayyad's offer until Saturday.
His departure could spell trouble for Mr Abbas. Mr Fayyad, a Western-trained economist, is well respected in international circles, and he is expected to play a key role in US efforts to revive peace talks.
As part of that effort, US secretary of state John Kerry has said he plans to announce a series of measures to boost the West Bank economy in the coming days. Mr Fayyad, a former official at the International Monetary Fund with expertise in development, would be key to overseeing such projects.
Mr Fayyad has served since mid-2007 as prime minister of the Palestinian Authority, the self-rule government that administers roughly 40% of the Israeli-controlled West Bank. The 61-year-old political independent has focused his efforts on developing the foundations of an independent Palestinian state.
A squeaky-clean public image and willingness to take on entrenched interests has often landed him in trouble with Mr Abbas' long-ruling Fatah movement. The relationship between Mr Fayyad and Mr Abbas has been tense for some time, and the prime minister told Abbas already late last year that he wanted to quit. Mr Abbas told Mr Fayyad repeatedly to wait. But the conflict between the two escalated last month over the resignation of Mr Fayyad's finance minister, Nabil Kassis. Mr Fayyad accepted the resignation, but Mr Abbas then overruled the prime minister, effectively challenging his right to hire and fire cabinet ministers.
Mr Fayyad told confidants in recent days that he was determined to leave. The prime minister also complained about what he said was an attempt by leading Fatah members to undermine him. Mr Fayyad has good ties with the US and is credited with cracking down on public corruption, securing foreign aid and preparing the groundwork and infrastructure for a future Palestinian state.
The White House said it appreciates the efforts of Mr Fayyad and Mr Abbas in working with the US and other nations to support the creation of an independent Palestinian state. "Prime Minister Fayyad has been a strong partner to the international community and a leader in promoting economic growth, state-building, and security for the Palestinian people," National Security Council spokeswoman Caitlin Hayden said. "We look to all Palestinian leaders to support these efforts."