Mr Jorg Haider resigned last night as leader of Austria's far-right Freedom Party, three weeks after the party entered government for the first time.
Announcing his decision at a Vienna press conference just before midnight, Mr Haider said he did not want to stand in the way of the coalition between the Freedom Party and the conservative People's Party.
He denied that the diplomatic freeze by Austria's EU partners prompted his move and said he was not leaving politics. But international pressure on the government exposed Mr Haider as a political pariah who was damaging Austria's reputation abroad.
Mr Haider, who is not a member of the cabinet, will be succeeded as party leaderby Austria's vice-chancellor, Ms Susanne Riess-Passer. A former party press officer, she is renowned for her fierce loyalty to Mr Haider. "I did not wish for this decision but I respect it. We will continue on a common path," she said.
Mr Haider will remain as provincial governor of Carinthia. Opposition politicians predicted he will use his regional base to snipe at the government and plot a return to the national scene.
The far-right leader last night refused to rule out a bid to become chancellor in the future.
There have been street protests against the right-wing coalition every night since the government was sworn in and 250,000 Austrians demonstrated in Vienna just over a week ago.
Although the government's critics object to the Freedom Party's policies, most of the international controversy has centred on Mr Haider himself. He won notoriety by praising Hitler's employment policies, describing concentration camps as "punishment camps" and expressed admiration for Waffen SS veterans.
The leader of the far-right Freedom Party, Mr Jorg Haider, surprised Austria's political scene last night by bowing to international pressure to resign as party leader. Sources close to Mr Haider said he told a meeting of his party's hierarchy that "he did not want to stand in the way" of the coalition formed this month between the Freedom Party and the conservative People's Party.
Mr Haider was due to give further details about his decision at a press conference in Vienna shortly before midnight last night but it is clear that the diplomatic freeze imposed by Austria's EU partners was the main reason behind his abrupt move.
The diplomatic sanctions have of themselves had little impact but Austrian business leaders complain that the controversy surrounding the new government has damaged trade.
There have been street protests against the coalition every night since the government was sworn in and an estimated 250,000 Austrians joined a demonstration in Vienna just over a week ago.
Although the government's critics object to the Freedom Party's policies, most of the international controversy has centred on Mr Haider himself. He achieved notoriety by praising Hitler's employment policies, describing concentration camps as "punishment camps" and expressing admiration for Waffen SS veterans.
His party has run openly racist campaigns against immigrants and asylum-seekers and espouses draconian law and order policies.
Dr Haider, who does not occupy a cabinet post, is expected to remain as provincial governor in his home state of Carinthia and he is unlikely to abandon his long-term ambition of becoming Austria's chancellor.
But his resignation will be greeted with considerable satisfaction by Austria's EU partners.
