JERUSALEM -- The internationally respected prime minister of the Palestinian Authority, Salam Fayyad, resigned on Saturday, adding a new level of uncertainty to the Palestinian government in the West Bank days after Secretary of State John Kerry proposed a broad initiative to boost the Palestinian economy there to shore up peace efforts.
The president of the Western-backed Palestinian Authority, Mahmoud Abbas, accepted Mr. Fayyad's resignation and asked him to stay on until a new government could be formed, according to Nour Odeh, a Palestinian government spokeswoman.
Reports have been rife in recent weeks that Mr. Fayyad, a political independent, would either resign or be fired because of differences with Mr. Abbas and his Fatah party, which dominates the authority.
Underlying tensions rose to the surface in early March when the finance minister, Nabil Qassis, announced that he was leaving his post. Mr. Fayyad accepted the minister's resignation against the wishes of Mr. Abbas.
This month, the Fatah Revolutionary Council, the party's parliament, criticized Mr. Fayyad's policies with unusual bluntness, describing them as "improvised and confused." Mr. Fayyad has also borne the brunt of popular anger in recent months over rising prices and economic hardship in the West Bank.
Mr. Fayyad, an American-educated economist, has gained the confidence of the West as a model of transparency, accountability and stability. Since being appointed to the premiership in 2007, he has championed law and order in the West Bank after years of chaos, and focused on building the institutions of a future state.
But the Palestinian Authority has been mired in financial crisis for two years, in part because of a shortfall in donor funds and Israel's withholding of tax revenues in response to Mr. Abbas's bid for enhanced status for the Palestinians at the United Nations. The authority has frequently been unable to pay its tens of thousands of employees in full and on time.
Mr. Abbas appointed Mr. Fayyad prime minister of the government formed after the split with Hamas, the Islamic militant group. It won Palestinian parliamentary elections in 2006 and a year later seized full control of Gaza after a bloody factional war there. Hamas routed Fatah forces from Gaza, confining Mr. Abbas and his authority to parts of the West Bank.
Mr. Fayyad resigned previously, in 2009, amid reconciliation efforts between Fatah and Hamas, saying that he wanted to pave the way for a new unity government with Hamas. But he was reappointed two months later after reconciliation talks with Hamas ended.
Though well respected abroad and by many Israelis, Mr. Fayyad has struggled to form a popular constituency on his home turf. He ran in the January 2006 legislative elections as the leader of a new party, Third Way, with Hanan Ashrawi, a Christian. They won only 2.4 percent of the vote.
His departure this time is likely to undermine Western confidence at a critical time, after the formation of a new government in Israel and with the Obama administration investing efforts in trying to renew Israeli-Palestinian peace negotiations.
President Obama and Mr. Kerry met separately with Mr. Fayyad during their recent visits to the region. Mr. Obama told an Israeli audience in Jerusalem that the Israelis had "true partners" in Mr. Abbas and Mr. Fayyad.
This article originally appeared in The New York Times.