Algerian President Abdelaziz Bouteflika has accepted the resignation of his cabinet, a move widely expected after last month's parliamentary election.
Abdelaziz Belkhadem will head Algeria's caretaker government
Prime Minister Abdelaziz Belkhadem's ruling coalition won 249 of the 389 seats in the poll, but its victory was marred by a record low turnout of 35%.
The government has also been weakened by a series of bombings by Islamists.
Correspondents say a new cabinet is expected to be named shortly with Mr Belkhadem likely to keep his job.
A caretaker government, made up of 11 of the 26 ministers, will rule until then.
The other 15 ministers, who won seats in the National People's Assembly, must decide whether to remain in post or serve as MPs.
Algerian law does not allow serving ministers to retain their parliamentary seats.
Mr Belkhadem was appointed Algeria's prime minister in May 2006.
The former parliamentary speaker is secretary-general of the National Liberation Front (FLN), the dominant party in the ruling Presidential Alliance.