Romania's Prime Minister Emil Boc has stepped down to "defuse political and social tension" after a series of protests against austerity measures.
Speaking after a cabinet meeting, he said he had given up the government's mandate as "it is the moment for important political decisions".
Although Romania's economy grew last year, the government has been hit by three weeks of demonstrations.
Mr Boc has imposed a 25% cut in public sector wages and a freeze on pensions.
Sales tax was also increased to 24%, in a country seen as Europe's second poorest.
Romania said it needed to implement the measures to qualify for the next instalment of a 20bn-euro ($25bn; £17bn) bailout loan from the International Monetary Fund (IMF).
In a statement, Mr Boc, 45, said that in a time of crisis, his centrist government had not taken part in a popularity contest but had acted to save the country.
Elections in Romania are scheduled to take place in November and there is speculation that President Traian Basescu may seek to appoint a technocrat-led government until the vote.
Protests broke out last month, initially against the resignation of popular junior health minister Raed Arafat, but soon became an expression of discontent against austerity and corruption.