Thai Prime Minister Kriangsak Chamanan resigned unexpectedly this morning, following three weeks of mounting criticism from opposition politicans, labor unions and students focusing on his military-dominated government's economic policies.
"I have decided to resign the prime ministership so that democracy can be maintained," Kriangsak told an special session of parliament, which had gathered to debate his governments policies before a vote of confidence.
Kriangsak, 62, said he wanted "to open the way for other capable people to administer the country."
Kriangsak, an Army general who seized power in 1977 and then staged elections, will continue as caretaker leader. Parliament will suggest a successor whose name will be submitted King Bhumibol Adulyadej for approval.
Parliament is scheduled to begin considering the issue on Monday.
Observers were uncertain whether Kriangsak's resignation would change Thai domestic or foreign policy significantly.
Thailand is the United States' closest ally on the Southeast Asian mainland. U.S. officials have lauded its decision to accept hundreds of thousands of Indochinese refugees and have pledged some support if Vietnamese troops in neighboring Cambodia attacked Thailand.
Some observers said Kriangsak's move was meant to convince parliament that with the country's well-being threatened by the conflict in Cambodia and OPEC oil price rises, he is the best man for office.
Since 1932, Thai politics have been dominated by the armed forces, with only brief intervals of civilian rule. As criticism against Kriangsak mounted in recent weeks, rumors circulated that a coup was imminent. Kriangsak came to power in a 1977 coup.
The current crisis began three weeks ago when Kriangsak ordered steep increases in prices of oil products. With inflation already running at around 20 percent, opposition groups accused Kriangsak of ruining the economy and unfairly burdening the poor.
A Cabinet reshuffle announced several days later was dismissed as inadequate.