Israeli Prime Minister Nafatali Bennett (C) arrives to the Knesset (parliament) chamber ahead of a session in Jerusalem, on June 27, 2022 (AFP)
The government announced last week that it would dissolve the Knesset ahead of elections expected this fall, but the voting required for dissolution has been bogged down by disputes with the opposition.
Bennett's office said he has informed members of his right-wing Yamina party that he will not run in the next elections, expected in October or November.
He will continue to serve as alternate prime minister in a caretaker government to be led by Yair Lapid, the architect of the coalition who is currently foreign minister.
Bennett's office said he would deliver a statement later on Wednesday.
Bennett embodies many of the contradictions that animate his small country. He's a religious Jew who made millions in the mostly secular hi-tech sector; a champion of the settlement movement who lives in a Tel Aviv suburb, and a former ally of Benjamin Netanyahu who partnered with centrist and left-wing parties to end his 12-year rule.
He was once the leader of the main settler council, and remained opposed to Palestinian statehood, even after becoming prime minister at the head of a coalition that included left-wing parties.
His government took steps to improve economic conditions in the occupied West Bank and Gaza but ruled out any return to the long-stalled peace process.
Bennett sought to unite the country after a prolonged period of political gridlock that brought four elections in less than two years, but in the end his own small party largely crumbled, as members rebelled against his coalition.
Netanyahu whipped up their shared right-wing base against Bennett, accusing him of betraying them by forging an alliance with left-wing parties and even an Arab faction.
Bennett's speeches in the Knesset were regularly met with shouting and heckling from Netanyahu allies. His family received death threats.
Many expected Bennett to step away from politics once the government fell.
It's unclear whether the disarray in Yamina will help or hurt their natural allies on the right. If the party runs but fails to clear the electoral threshold, it could deprive Netanyahu and his allies of a potentially crucial partner, or Bennett's successor could, like him, emerge as a kingmaker.