The Palestinian unity government formed only a year ago has resigned after President Mahmoud Abbas said it was unable to operate in the Gaza Strip.
The resignation came after it emerged that the Gaza Strip's rulers Hamas held separate indirect talks with Israel.
An official said that Prime Minister Rami Hamdallah had handed his resignation to President Mahmoud Abbas on Wednesday afternoon, and Abbas had ordered him to form a new government.
Various Palestinian factions, including Hamas, are to be consulted before a new government is formed.
Abbas earlier on Wednesday announced that the government would resign within 24 hours, as Hamas sources said the group was holding separate, indirect talks with Israel on ways to firm up an informal ceasefire agreement that took hold last August, ending a 50-day war in Gaza.
Some have argued that news of the secret talks prompted Abbas to move to dissolve the unity government.
A Palestine Liberation Organisation official said the new government was likely to be one of politicians rather than technocrats.
Al Jazeera's Nisreen El Shamayleh, reporting from Ramallah on Wednesday, said she had spoken to a Hamas spokesperson who had said Hamas would reject any unilateral dissolution of the Palestinian consensus government without holding discussions with all parties.
Indirect verbal exchanges
Hamas officials confirmed the exchange of indirect verbal messages between Hamas and Israel through European Union, Turkish, and Qatari mediators.
The messages concern a possible long-term, extendable ceasefire between Hamas and Israel, under which Israel would allow the construction of a floating sea port linking the Gaza Strip with the rest of the world.
Against this background, Mousa Abu Marzouk, Hamas' deputy leader, and other Hamas officials arrived in Qatar on Tuesday to discuss the truce plan, reports say.
Salah Bardawil, a senior Hamas leader and legislator, said: "There are a number of European officials who have put forward a verbal initiative for a potential long-term truce in the Gaza Strip that extends the ceasefire from three to five years.
"So far, no vision or timetable for the implementation of the truce has crystallised."
Source: Al Jazeera