Palestinian Finance Minister Salam Fayyad, who has battled parliament to force it to carry out fiscal belt tightening measures, has submitted his resignation ahead of legislative elections due in January.
Fayyad, a former International Monetary Fund official, said on Saturday he wanted to step down because he was considering running in the elections, and turned in his resignation several days ago.
Other officials said his resignation was in protest against the government's refusal to implement concrete fiscal reforms.
The move by Fayyad followed threats in October by foreign donors to suspend budget support to the aid-dependent Palestinian Authority unless it reversed ballooning government wage costs.
There was no immediate word on whether Prime Minister Ahmed Qurie would accept Fayyad's resignation, which comes as Palestinians come under increasing scrutiny over how they run the Gaza Strip - seen as a proving ground for statehood following Israel's withdrawal after 38 years of occupation.
The World Bank has said boosting the Palestinian economy is crucial to peacemaking. Donors have given an average of $25 million a month this year in budget support for the Palestinian Authority, according to figures from an international envoy.