Taylor, a former warlord indicted for war crimes by a UN-backed court in Sierra Leone, sent a message to Liberia's parliament on Thursday in which he admitted he was no longer in a position to stay on as president.
He claimed in the message that he was the victim of an "international conspiracy", which meant he was no longer able to preside over what he described as the humiliation of the Liberian people.
“They have prevented me from carrying out my constitutional responsibility of defending the country, providing essential social services to the people," he said, referring to UN sanctions and an arms embargo in place since 2001.
Parliament approved Taylor's resignation by 46 votes in favour with one against, as well as his choice of Vice President Moses Blah as his successor.
Taylor's comments came as a Nigerian advance guard of west African peacekeepers made their first foray into Monrovia, as they bid to impose peace between Taylor's loyalist troops and rebel forces.
But a mysterious arms shipment that arrived overnight in the Liberian of capital Monrovia raised new questions about Taylor's commitment to stand down.
A Boeing 707 jet arrived at Monrovia's main airport with an illicit shipment of enough arms and ammunition to fill two trucks.
Over 250,000 displaced
It is unclear where the shipment of arms had come from.
But Liberian Defence Minister Daniel Chea was prevented from retrieving the cargo by the Nigerian peacekeepers, sources close to the force said.
If all goes according to plan, Taylor should step down at midday on Monday and start making preparations to travel to Nigeria, the region's economic and military giant which has offered him asylum.
But while it appears increasingly likely that Taylor will fulfill his pledge to step down in three days, international aid agencies renewed their calls for attention to the humanitarian situation in Liberia.
Monrovia is now home to some 250,000 displaced people living in appalling conditions amid an acute shortage of food, drinking water and medicines.
The US promised to respond to a new UN appeal for humanitarian assistance to Liberia while team of US experts arrived in Monrovia to assess the worsening situation.
The United Nations on Wednesday launched a fresh international appeal to raise 69 million dollars from donors for emergency aid in Liberia.
Donor governments have provided less than 22 percent of the $42.7 million the UN asked for last November, although Liberia was suffering "a human catastrophe of horrific proportions," the UN said.