Israeli Prime Minister Ehud Olmert announced his resignation at a cabinet meeting today, officials said.
However, the scandal-hit leader could remain in office for weeks or months until a new government is formed.
It was not immediately clear when Mr Olmert would formally submit his resignation to President Shimon Peres. After he does so, he becomes caretaker prime minister until Israel has a new government through a coalition deal or an early election.
Tzipi Livni, who hopes to become Israel's first woman leader since Golda Meir in the 1970s, narrowly won a hard-fought election on Wednesday to succeed Mr Olmert as leader of the Kadima party.
She faces a struggle to heal divisions within her own movement and to persuade smaller parties to join her in a new government.
Mr Peres can by law take 14 days to ask Ms Livni, the foreign minister, to form a government and is likely to consult other party leaders. Mr Peres flies out to New York tomorrow to attend UN meetings, his office said.
Ms Livni, a 50-year-old lawyer and one-time Mossad agent, would have six weeks to try to secure a new coalition deal – with Ehud Barak's Labour on the left and Jewish religious party Shas on the right, as well as with several smaller groups.
Should she fail - and Kadima has only a quarter of the seats in the Knesset - right-wing opposition leader Benjamin Netanyahu could get his wish for an early parliamentary election, which polls indicate his Likud party would win.
Reuters