Palestinian PM resigns

"[President Mahmoud Abbas] told Dr. Salam Fayyad he accepted his resignation, and asked him to conduct the work of the government until a new government is formed," the official news agency WAFA said.

The head of government's resignation came as no surprise, as the relationship between the two leaders had been deteriorating rapidly in recent months.

A row over the resignation of Palestinian Finance Minister, Nabil Kassis, last month appeared to have brought the prime minister and the president to an impasse. Prime Minister Fayyad had accepted Kassis' decision to quit the top finance post, but President Abbas rejected the request, overriding the head of government's authority to determine his own cabinet.

The prime minister's departure comes as the Palestinian officials are fighting an economic crisis, while at the same time courting Middle Eastern peace efforts revived by the Obama administration last month.

Salam Fayyad, 62, a renowned economist who had been educated in the West, won respect from the international community for his work toward developing the infrastructure needed for a stable state free of Israel.

kms/jr (AFP, AP, Reuters, dpa)