Ivo Sanader, the Croatian prime minister, has announced his resignation, saying he will withdraw from politics altogether.
Local media had speculated previously that Sanader would step down so that he could run for president in early 2010.
"I have decided to withdraw from active politics and will not run as a candidate for Croatian president [in elections due later this year]" he announced on Wednesday.
Sanader is expected to recommend Jadranka Kosor, his deputy, as a replacement, state radio reported.
Croatian media has not yet reported a reason for Sanader's decision, but he faced growing economic troubles, with the country's GDP falling 6.7 per cent in the first quarter - the biggest drop in 10 years.
The conservative leader has led the government since 2003, winning a second term in November 2007.