Czech Prime Minister Bohuslav Sobotka said on Tuesday he would resign later this week along with the whole cabinet in response to a row with Finance Minister Andrej Babis over his past business activities.
Sobotka said the resignation could allow his three-party centre-left cabinet to regroup without Babis, a billionaire who entered politics in 2011, or possibly lead to an early national election ahead of regular polls planned for Oct. 20-21.
He had demanded that Babis explain his financial dealings, including using legal loopholes to issue tax-free bonds.
Babis has denied any wrongdoing. A spokeswoman for his ANO movement not immediately available for comment and a finance ministry spokesman declined to comment.
The dispute came as parties geared up for the October elections, in which polls predict a sound victory for ANO.
"I cannot as prime minister further bear responsibility for a situation where a person whose past is unclear is in the position of finance minister," Sobotka told reporters.
"Therefore I am taking the only reasonable solution, which is that the government resigns."
Sobotka was widely expected to fire Babis but leave the cabinet in place.
But he said dismissing Babis would help make him into a "martyr".
Babis's centrist ANO movement leads Sobotka's centre-left Social Democrats by a double-digit margin in most opinion polls.
Resignation gives the initiative to President Milos Zeman, who has the power to appoint a new prime minister. An early election can be called if ruling and opposition parties in parliament agree to bring the vote forward.
Sobotka said he would seek a meeting with Zeman to agree timing for the resignation.