Japan's Prime Minister Yasuo Fukuda has announced his resignation during a news conference at his official residence.
The surprise announcement means the 72-year-old is resigning less than a year after he took office.
His government has suffered chronic unpopularity. Lost pension records, a controversial healthcare scheme and a sliding economy have added to his woes.
Mr Fukuda has also been frustrated by the upper house of parliament, which is controlled by the opposition.
"If we are to prioritise the people's livelihoods, there cannot be a political vacuum from political bargaining, or a lapse in policies," said Mr Fukuda.
He told the hastily convened news conference that a new team was needed to implement his party's policies.
Mr Fukuda did not say when his resignation would take effect, adding that the ruling Liberal Democratic Party would hold an internal election to choose his successor.
"I believe there will be an election for the party leader," he said. "The leader will be appointed as the prime minister."
Taro Aso is a former foreign minister and front-runner to succeed Mr Fukuda
Japan's next general election must be held no later than September 2009.
Last month, Mr Fukuda instigated a major cabinet reshuffle in which one of his main political rivals, Taro Aso, assumed the key role of secretary general.
The move was seen as a last-ditch attempt to shore up Mr Fukuda's government and boost its flagging popularity, but it failed to impact low cabinet approval ratings, which had been below 30% for several months.
Mr Aso, 67, went from being foreign minister to becoming party secretary general under Prime Minister Shinzo Abe in August 2007.
However, following Mr Abe's resignation, he left the post and lost the LDP leadership contest to Mr Fukuda soon afterwards.
Known for his conservative views, he has advocated a tough line towards North Korea and rejects changing the law to allow women to ascend the throne.
He is also seen as a charismatic figure who is known to love Japanese manga cartoons.