Palestinian Prime Minister Salam Fayyad resigns

Palestinian Prime Minister Salam Fayyad has resigned, after a long-running dispute with President Mahmoud Abbas. Official Palestinian news agency Wafa states that the president accepted Fayyad's resignation after they met in person. That said Abbas has asked Fayyad to remain as caretaker until a new government is formed.

A BBC correspondent says Fayyad's resignation is a major blow for US efforts to restart the long-stalled peace process with Israel. His resignation is the climax of long-running and increasingly bitter dispute between the Fayyad and Abbas. They have been at odds over economic policy since Finance Minister Nabil Kassis quit last month, and there have been rumors that Fayyad would step down.

Fayyad accepted Kassis's resignation, but he was subsequently overruled by Abbas, challenging his authority. Abbas reportedly waited several days before accepting Fayyad's resignation. It comes despite recent attempts by US Secretary of State John Kerry to reconcile the two men.

BBC journalist Wyre Davies in Jerusalem says Fayyad was seen as a key person in US attempts to restart peace negotiations with Israel. Abbas may now struggle to replace him with someone who can match his level of international credibility, our correspondent says. He is expected to name a new prime minister within days.