Budapest  - Hungarian Prime Minister Ferenc Gyurcsany announced his resignation on Saturday, saying a new government with a new leader was needed to tackle his country's economic meltdown.

Hungary's main opposition party, Fidesz, promptly repeated its call for early elections, announcing that it plans to present a motion to dissolve parliament on Monday. If that motion is carried, it would complicate Gyurcsany's goal of passing his position on to another member of his party.

Hungary has been particularly hard hit by the global recession. At the same time, Gyurcsany has seen his personal popularity hit a rock bottom of 18 per cent - the lowest for any Hungarian premier since the fall of communism.

At a congress of his Hungarian Socialist Party (MSZP) in Budapest, the deeply unpopular premier spoke of the need for a wider social consensus to tackle the crisis.

"I hope I am the only obstacle to this, and, if I am, then I will now remove that obstacle," Gyurcsany said.

He said he would inform parliament of his decision on Monday and called for an extraordinary party congress to be held in two weeks' time, where a new party leader and prime minister would be selected.

A vote of no confidence in Gyurcsany will be then initiated in parliament on April 14, the MSZP said.

"I do not want to go, I do not want to give up my mission ... I want to lead the Socialist Party," Gyurcsany added.

However, those plans could be complicated if the centre-right Fidesz party manages to dissolve parliament. Fidesz has held a commanding lead in the polls since 2006, when the MSZP introduced a draconian austerity package shortly after securing a second term in office.

Fidesz reacted to the prime minister's move on Saturday by flatly refusing to discuss a reshuffle of the government and pressing ahead with its plans to force early elections.

"A new government can only be born of the will of the voting public," said Fidesz caucus leader Tibor Navracsics.

A survey in weekly news magazine HVG, conducted by pollster Median, showed that Fidesz is supported by 66 per cent of decided voters, compared to just 23 per cent for the MSZP.

Nevertheless, Fidesz has been criticized by Hungary's government and other opposition parties for failing to produce a crisis management plan of its own.

With an already weak economy after years of overspending, Hungary needed a 25-billion-dollar IMF-led rescue loan last October as it looked set to default on foreign debts.

Since then, the domestic economic downturn has worsened, with over 30,000 jobs lost since October and forecasts for negative economic growth this year being revised downwards almost monthly.

Gyurcsany did not name a potential successor but, shortly after Gyurcsany's announcement, former finance minister Lajos Bokros told journalists that he was prepared to take on the job.

Bokros served under a previous socialist administration in the 1990s. His Bokros Package of severe austerity measures helped pull the country out of an earlier economic crisis, but also destroyed the popularity of the then socialist government.

Nevertheless, he is considered credible among reformers and analysts who believe that Hungary must rein in its bloated public spending, currently over 50 per cent of gross domestic product, and cut taxes in order to stimulate the economy.

However, speaking to Hungarian national radio, the leader of the MSZP's parliamentary caucus, Ildiko Lendvai, promptly dismissed talk of Bokros, leaving the question of who might succeed Gyurcsany wide open.

"The MSZP has a list of prime ministerial candidates from both within and without the party, however there is definitely no mention of Lajos Bokros," Lendvai said.

The leader of the conservative Hungarian Democratic Forum, Ibolya David, earlier this month proposed that a constructive vote of no confidence be held to replace Gyurcsany with Bokros.

An opinion poll published last Thursday in HVG showed that Gyurcsany's approval rating had fallen to just 18 per cent, the lowest of any premier since Hungary became a democracy 20 years ago.

Furthermore, 91 per cent of respondents agreed that the country is "heading in the wrong direction."

The leak in September 2006 of private party speech in which Gyurcsany acknowledged lying about the economy to win re-election sparked rioting and anti-government protests that have continued sporadically ever since. (dpa)