The Italian government official who had called Germans "hyper-nationalist" arrogant blondes resigned tonight, the Italian news agency ANSA said.
The comments by Mr Stefano Stefani, an industry minister responsible for tourism, had caused a diplomatic crisis with Germany and led German Chancellor Gerhard Schroeder to cancel his planned holiday to Italy.
Mr Stefani made the announcement of his resignation at a rally in northern Italy, the ANSA news agency said. Pressure had been mounting on Premier Silvio Berlusconi to remove the official.
Mr Stefani had called Germany a "country intoxicated with arrogant certainties," and Germans "stereotyped blondes with a hyper-nationalist pride" in an article in La Padania, the newspaper of the anti-immigrant, occasionally xenophobic Northern League.
He had also called for an IQ test in Germany, saying it would be "necessary" and "indispensable".
Mr Stefani made the comments after the first Italian-German flap played out in the European Parliament last week, when Mr Berlusconi told German politician Mr Martin Schulz that he would make a "perfect" Nazi prison guard in a movie.
Mr Schulz had asked Mr Berlusconi questions over legislation that critics argue helped the premier in his legal battles.
"Schulz ... probably grew up taking part in noisy burping contests after drinking gigantic amounts of beer and gorging himself on fried potatoes," Mr Stefani wrote in La Padania. AP