Rumours that Ramush Haradinaj was about to be charged by Hague chief prosecutor Carla del Ponte had circulated since before he became prime minister last December, raising fears of violence if Nato peacekeepers were forced to arrest him.
"Yes, the prime minister has been informed he has an indictment," a senior official in the Kosovo government told Reuters. "We have to face it.
"He has informed the president [Ibrahim Rugova]. He will resign today ... and will fly to the Hague tomorrow."
A year ago, mobs of ethnic Albanians attacked Serb enclaves in the United Nations-run province in two days of rioting which left 19 people dead and hundreds of homes in ashes.
Haradinaj had made clear he would not defy the tribunal.
But peacekeepers were taking no chances. Germany flew in extra soldiers to bolster its peacekeeping contingent in the Nato-led KFOR mission, and Britain deployed an extra 500 troops on Monday after an urgent request from Nato, a KFOR spokesman said.
Extra Nato forces have been
flown into the province
The force currently numbers nearly 20,000.
The United Nations mission in Kosovo, Unmik, on Monday raised its security threat assessment to "black" in western Kosovo, ordering non-essential staff to stay off the streets.
Details of the indictement against Haradinaj have not been made public. The UN court has investigated him over his role in the 1998-99 guerrilla war against Serb forces and the alleged murder of Kosovo Serb civilians and Albanian "collaborators".
Haradinaj, 36, spent much of the 1990s as an economic migrant in France, Switzerland, Sweden and Finland, drifting between jobs as a construction worker and nightclub bouncer.
He returned to Kosovo in early 1998 to command the western wing of the Kosovo Liberation Army, helping to mount what was to become a full-scale insurgency against Serb oppression and earning a reputation for ruthlessness.
Two of Haradinaj's brothers were killed fighting Serb security forces and a third was found guilty of war crimes against Serbs in 2002.
Haradinaj's political party, the Alliance for the Future of Kosovo (AAK), was the smaller of two parties to emerge from the ranks of the KLA.
He entered Kosovo's first interim government in February 2002 in a coalition with former guerrilla commander Hashim Thaci and the veteran pacifist president, Rugova, who leads Kosovo's largest political party.
In the October 2004 elections, his AAK won nine seats in Kosovo's 120-seat parliament. Haradinaj later announced a surprise coalition deal with President Rugova, becoming prime minister in December 2004 and confining Thaci to the opposition.