Prime Minister Halldor Asgrimsson of Iceland has announced he is stepping down following his party's poor performance in local elections.
Halldor Asgrimsson had been PM since 2004
Mr Asgrimsson, 58, told reporters that Foreign Minister Geir Haarde would take over as prime minister.
He said he would retain his seat in parliament, but would not hold a position in the cabinet.
Support for Mr Asgrimsson's Progressive Party fell sharply in last month's municipal elections.
"I take personal responsibility that the party lost," the prime minister said.
Analysts say Mr Asgrimsson had also been under pressure to resign amid rising interest rates and inflation.
Following the announcement, Mr Haarde said his leadership would not mean radical change.
"This will be the same government, with the same parties," he told reporters.