The Tripoli-based UN- recognised Government of National Accord's (GNA) Premier Fayez Al-Sarraj announce his resignation in a televised speech to the Libyan people from the capital, Tripoli late on Wednesday.
Al-Sarraj said he wants to hand over power to a new administration next month amid inter-Libyan peace talks in Geneva.
"I declare my sincere desire to hand over my duties to the next executive authority no later than the end of October," he said.
"Hopefully, the dialogue committee will complete its work and choose a new presidential council and prime minister," Al-Sarraj added.
Earlier on Tuesday, officials "familiar with his thinking" told Bloomberg that he "would relieve some of the pressure on himself while setting the stage for his exit after the Geneva talks."
Sarraj, a member of the eastern parliament in Tripoli, was appointed in 2015 to lead the presidential council, created by a political agreement that was signed by Libya's factions in Skhirat, Morocco.
The government in eastern Libya resigned on Sunday amid street protests that erupted across the divided country over dire living conditions, officials said.
Abdallah Abaihig, a spokesman for the parliament, confirmed the government's resignation, saying lawmakers would review it in their next meeting. No date set for the session.
Libya was plunged into chaos when a NATO-backed uprising in 2011 toppled longtime ruler Moammar Gadhafi, who was later killed. The country has since split between rival east- and west-based administrations, each backed by armed groups and foreign governments.