The abdication paves the way for the prime minister and longtime de facto ruler, Shaikh Sabah al-Ahmed al-Sabah, to become the country's new amir, and ends an unprecedented public quarrel inside the ruling family.
Parliamentarian Nasir al-Sanih, speaking to the the Associated Press, said: "An agreement has been reached in the family and he will sign the abdication papers tomorrow."
He said the two struggling camps of the family met on Monday evening in order to reach a compromise before a parliament session on Tuesday that was to debate cabinet demands that the ailing new amir should be displaced in favour of Shaikh Sabah.
"The emir, Shaikh Saad, will step down tomorrow," one source
in the ruling family circle told Reuters. "There is a settlement, 100 per cent."
Aljazeera's correspondent in Kuwait reported that Shaikh Saad has submitted a letter of abdication to Kuwait's parliament.
A swearing-in ceremony for Shaikh Saad had been planned for Tuesday evening. It was not yet known when Shaikh Sabah would take the oath as amir.
Shaikh Sabah is now set to
become the new amir
Shaikh Sabah, the prime minister, has been running the day-to-day affairs of the country since the late amir, Shaikh Jaber al-Ahmed al-Sabah, and his successor and the then-crown prince, Shaikh Saad, both fell ill.
Both Shaikh Saad and Shaikh Sabah are in their mid-70s - their exact ages are not known - but Shaikh Sabah is the more fit of the two. He had a heart pacemaker implanted but otherwise is said to be in good health.
The leadership crisis reached a climax on Friday when scores of ruling family members visited Shaikh Sabah at his residence and asked him to take charge of the country.
He accepted the draft, which was widely seen as approval of his becoming amir.
The push for Shaikh Sabah's ascension, however, was complicated when some members of Shaikh Saad's branch of the ruling family objected. Key among them was Shaikh Salem al-Ali al-Sabah, chief of the national guard and the oldest member of the family.