Saad Hariri has been trying to form a government for 10 weeks
The leader of the pro-Western alliance in Lebanon, Saad Hariri, says he is to abandon his attempt to form a national unity government.
Mr Hariri has spent more than 10 weeks trying to get the majority and minority factions to agree on a cabinet line-up.
This week, he proposed a cabinet list unilaterally and was bitterly denounced by the Hezbollah-led opposition.
President Michel Suleiman must now consult with parliamentary parties before nominating a new PM-designate.
"Given that my commitment to forming a government of national unity has run up against difficulties that everyone now knows about, I announce that I have informed the president of the republic that I have abandoned trying to form a government," Mr Hariri said in Beirut.
"I hope that this decision will be in the interests of Lebanon and will permit a re-launch of dialogue," the AFP news agency reported him as saying.
Mr Hariri - son of former Prime Minister Rafik Hariri, who was killed in a car bomb in 2005 - had been trying to form a government since Lebanon held elections in June.
His Western- and Saudi-backed alliance emerged as the largest party, but needed support of other parties to form an effective government.
The rival factions were able to agree on a formula of 30 cabinet ministers, with 15 from Mr Hariri's bloc, 10 from the Syrian- and Iranian-backed Hezbollah and five chosen by the president.
However, picking candidates for the most-sought after ministries has proved a much harder task.
Reports say one of the key disagreements was over the demand of Hezbollah's Christian ally the Free Patriotic Movement that the outgoing communications minister Jibran Bassil stay in his job.
Mr Bassil is son-in-law of FPM leader Michel Aoun, who has been asking for four of the seven cabinet positions given to the Maronite sect in Lebanon's sectarian based system.
A political crisis erupted in late 2006 when all Shia ministers resigned from the unity government cabinet. It lasting until May 2008 when Beirut witnessed its worst bout of sectarian violence since the 1975-1990 civil war.
Qatar brokered a deal for the formation of a national unity government and elections held just over a year later, on 7 June 2009.
Correspondents say it is now down to Mr Suleiman to calm this latest crisis. Lebanese papers speculated he might reappoint the 39-year-old Mr Hariri - who has not previously held high offices - after he consults with MPs.