Jordanian Prime Minister Hani Mulki resigned on Monday after days of anti-austerity protests by citizens suffering from high unemployment and repeated prices hikes.
Mulki was summoned by King Abdullah II after the capital Amman and several other cities were rocked by protests that drew thousands of people.
"Prime Minister Hani Mulki submitted his resignation to the king this afternoon during a meeting at the Husseiniyeh Palace and the king accepted the resignation," a government source told AFP.
The king asked Education Minister Omar al-Razzaz to form a new government, the source added.
The rallying cries by demonstrators for Mulki to step down came after the government adopted a draft income tax law and announced new price hikes based on recommendations by the International Monetary Fund.
Protesters had vowed not to "kneel" and earned support from trade unions as well as a majority of MPs opposed to the new taxation.
On Saturday Mulki met with trade union representatives who demanded the income tax law be revoked, but they failed to reach an agreement.
According to official estimates, 18.5% of the population is unemployed, while 20% are on the brink of poverty.
The premier's meeting with the king came hours after around 5,000 people gathered outside Mulki's office in Amman, on the fifth consecutive day of protests.
- Price hikes -
Jordan, a mostly desert kingdom with few resources, has seen prices of several basic goods and services like bread, fuel and electricity steadily rise over the past year.
The Economist Intelligence Unit earlier this year ranked Jordan's capital as one of the most expensive in the Arab world.
Last month the government adopted a draft income tax law, yet to be approved by parliament, aimed at increasing taxes on employees by at least five percent and on companies by between 20 and 40%.
And last week it announced a new price hike for electricity and fuel, before revoking it under orders from the king following protests.
Jordan, a key US ally, has largely avoided the unrest witnessed by other countries in the region since the Arab Spring revolts broke out in 2011, although protests did flare late that year after the government cut fuel subsidies.
James Dorsey, a Middle East analyst, warned that the prime minister's departure may not be enough to satisfy protesters.
"Jordanians may this time round not be pacified by cosmetic measures like Mulki's resignation and the temporary rescinding of price and tax hikes," said Dorsey, a senior fellow at Singapore's S. Rajaratnam School of International Studies.
The IMF loan, intended to support economic and financial reforms, has the long-term objective of reducing Jordan's public debt from about 94% of GDP to 77% by 2021.
Mulki had formed his government just over two years ago in May 2016.