Algerian President Bouteflika has resigned, bowing to mass protest, Algeria’s state news agency APS reported on Monday.
He will give up his office before his designated end-of-term date on April 28.
The decision came after hundreds of people demonstrated in Algiers against Bouteflika’s new government.
Protesters carried slogans describing the new cabinet as “a blow to the people’s demands.”
Mr Bouteflika, who has faced mass protest against his rule for over a month, had maintained his position as defence minister in the caretaker government that was revealed on Sunday.
The government, headed by Noureddine Bedoui, composed of 27 ministers, including six members of the former cabinet.
Mr Bouteflika kept as military chief of staff the powerful General Gaid Saleh, who earlier this week called for the president to be declared unfit for office on health grounds.
Media report says Bouteflika’s resignation means there will now be a transitional phase.
The opposition Labour Party had described the new cabinet as a new face for an old government.
“It is unclear on what basis these figures were chosen,” the party said in a statement.
The party said “the so-called new government” aims to ensure “the continuity of the regime and the repressive presidential system rejected by the overwhelming majority.”
Former prime minister and opposition politician Ali Benflis had also criticised the move, saying “it is authoritarian practice that provokes the people.”
In March, Mr Bouteflika appointed Mr Bedoui, a former interior minister, as prime minister after the ailing president renounced a bid to run for a fifth term in office after mass street protests.
In recent weeks, thousands of Algerians have taken to the streets, with protests centering on the departure of Mr Bouteflika and radical change to the political system in the energy-rich country.