Bulgaria's government quit on Wednesday, Prime Minister Boyko Borisov announced, after days of sometimes violent protests sparked by sharply higher electricity prices expanded into nationwide demonstrations.
"It is the people who put us in power and we give it back to them today," Borisov told parliament. He said he would not be part of any interim government.
"I will not participate in a government where the police beat up people or where threats for protests replace political dialogue. If the street wants to govern the country, let it do it," the 53-year-old said.
Borisov, a right-wing ex-bodyguard, had ruled out resigning on Tuesday.
Bulgaria is expected to be run by a caretaker government until elections likely in the spring. Borisov's center-right GERB party will face a strong challenge for a coalition made up of Socialists, a pro-market party led by former EU Commissioner Meglena Kuneva and a party representing the country's Muslim minority.
"We are fully aware that the resignation will not improve the dire economic situation of the Bulgarian people, which deteriorated over the past three and a half years, but we hope that it will make the situation calmer," Kuneva told the Novinite news agency.
Bulgaria, the poorest country in the European Union, has been shaken over the past 10 days by protests that first focused on soaring electricity prices, then grew into nationwide demonstrations against the right-wing government.
Clashes left dozens of people wounded and scores were arrested as demonstrators fought running battles with riot police and vandalised government buildings, police cars and shops in the capital Sofia.
In the latest disturbances late on Tuesday, 15 demonstrators and two policemen were injured and 25 people were arrested in Sofia. The previous evening, 11 people including five police were hurt.
A 36-year-old man doused himself with gasoline and set himself on fire early Wednesday outside city hall in Varna in the east, where the first protests erupted, media reports said. He was hospitalized with 80 percent burns.
Another man, who was mentally ill, died after setting himself alight in the central city of Veliko Tarnovo on Monday.
Borisov attempted to take the heat out of the crisis by announcing on Monday the sacking of the unpopular finance minister and on Tuesday saying he would revoke the licence of Czech electricity firm CEZ.
Parliament is expected to vote on Borisov's resignation on Thursday. If it's accepted, President Rosen Plevneliev, a political ally of the prime minister, will appoint an interim government, which will take over until the next elections. It's still unclear when parliamentary elections, which were scheduled for July, would take place.
Borisov's resignation is a reminder that Europe's economic crisis is far from over and remains an explosive political issue in several countries.
Bulgaria has some of the European Union's healthiest public accounts, with a budget deficit of just 1.5 percent and government debt of 19 percent of gross domestic product (compared to 177 percent in neighboring Greece).
However the economy in the EU's poorest country has failed to recover after a contraction of over 5 percent in 2009 and unemployment has almost doubled over the past four years to over 12 percent. There is also widespread discontent over corruption. Bulgaria is second lowest ranked EU country in Transparency International's corruption perception index, after Greece.
Rising heating prices in this winter intensified discontent with many Bulgarians convinced the the government enjoys over cosy relations with power companies that have hiked prices.
Official unemployment hit 11.4 percent in December, but trade unions say the real figure is closer to 17 or 18 percent of the workforce. Inflation meanwhile hit 4.4 percent last month.
Voters are also angry at what they see as Borisov's failure to stamp out corruption and cronyism despite repeated calls by the EU to clamp down on graft since joining the bloc in 2007.
Analysts have long said that the once hugely popular Borisov — a former firefighter and police chief — was losing his sway with voters as the end of his government's term neared.
Even if Borisov's resignation was what the street rallies pressed for, analysts were divided on Wednesday over whether it would ease public anger.
"This move of Borisov aims to put out the fire of the protests. But we are yet to see if it will work," political analyst Rumyana Kolarova told state BNT radio.
For Gallup analyst Kancho Stoychev, however, "the resignation was the only right move in the current situation."
There will be concern that public anger with mainstream politicians could see a rise in support for populist groups such as the far-right Attack party.
Mariya Karimjee contributed to this report.