Taiwan's President Chen Shui-bian has ceded some powers to try and deflect a political crisis caused by a corruption scandal implicating a family member.
Mr Chen's personal popularity is at an all-time low
He said he was handing control of the cabinet to the prime minister and would take no part in political campaigning.
But Mr Chen's spokesman said he would remain in charge of foreign and defence policy, and oversee ties with China.
Mr Chen's announcement comes a week after his son-in-law was detained on suspicion of illegal share trading.
The case against Chao Chien-ming had prompted calls by opposition politicians for the president to resign.
Born in Taiwan
First president from DPP, after 50 years of KMT rule
Charismatic speaker with populist touch
Despised by China, which fears he wants formal independence
Ma Ying-jeou, leader of the opposition Nationalist (KMT) party, said Mr Chen's ceding of some powers was not enough.
"If he could not win people's hearts, what is the point of continuing his presidency?" he said.
The opposition has been trying to muster enough votes in the Legislature to recall Mr Chen - the first step towards forcing him from office - but is about 30 seats short of the two-thirds majority needed in the 225-seat chamber.
Members of Mr Chen's Democratic Progressive Party (DPP) had also called on him to give up some powers, fearing he had become an electoral liability.
According to a written statement, Mr Chen handed the day-to-day running of the island to Prime Minister Su Tseng-chang, and gave him the powers to name the Cabinet.
Mr Chen said he would no longer intervene in the running of the governing DPP.
The president also promised that his family would not engage in public functions other than charity events.
Chao Chien-ming has denied the allegations
It is an ignominious retreat for a man who has built his political career on cleaning up Taiwan's notoriously corrupt politics, the BBC's Rupert Wingfield-Hayes reports.
Mr Chen's move comes as his personal popularity hit an all-time low, and follows the DPP's heavy defeat in recent local elections.
With two years to go before he must step down as president, critics say that giving up his day-to-day powers risks leaving him a lame duck.
But others say that he has kept control over the most important portfolio, Taiwan's troubled relations with China. Mr Chen has infuriated China, which accuses him of wanting the island's independence.
China sees Taiwan as part of its territory and has threatened to use force if it ever moved to declare formal independence.
Mr Chen's son-in-law, Chao Chien-ming, was detained last week amid allegations he used insider information when buying shares in a property company.
Mr Chao denied the allegations.
But they have been particularly damaging for Mr Chen, as they followed separate allegations involving his advisers, and his wife.