The monarch had accepted Abu al-Ragheb’s formal resignation in a procedural move that would pave the way for the business-friendly politician to reappoint a new cabinet in the next few days.
Several outgoing ministers, including Foreign Minister Marwan Moasher are expected to stay on in the new government, said an official source.
The country’s first parliament elected since King Hussein’s 1999 death convened on Wednesday with 17 Islamist members of parliament promising a strong opposition to the pro-Western government.
King Abd Allah had postponed elections for 15 months, fearing turmoil in the Middle East and tension over Washington’s war against Iraq would bolster Islamists, who had boycotted previous elections.
Palace officials said Abu al-Ragheb was asked to stay in power due to his strong performance on the economy.
The premier had ushered in an economic turnaround that has helped to restore poor investor morale after years of government mismanagement.
Abu al-Ragheb’s outgoing government was formed in June 2000 with a mandate to boost the economy and attract foreign investment.
Under the constitution, most powers rest with the King who appoints the government, approves legislation and can dissolve the parliament.
New electoral laws have seen Jordan’s parliament expand from 80 to 110 seats and set aside a quota of six seats for female candidates.