Japanese Prime Minister Yukio Hatoyama has announced his resignation after just eight months in office.
His resignation comes after he broke an election pledge to move an unpopular US military base away from the southern island of Okinawa.
Mr Hatoyama's Democratic Party of Japan (DJP) is struggling to revive its chances in an election due in July.
The centre-left DPJ's election landslide last year ended half a century of conservative rule in Japan.
Mr Hatoyama, 63, was Japan's fourth prime minister in four years.
Broken promise
Until Tuesday night, Mr Hatoyama had insisted he would stay on while intermittently holding talks with key members of his party.
But he announced his resignation at a special meeting of DJP lawmakers on Wednesday, telling them the government's work had "not reflected the public's wishes".
"I apologise to all of you lawmakers here for causing enormous trouble," he said.
Announcing his decision to the country in an emotional televised address, he said he had "tried to change politics in which the people of Japan would be the main actors" but had not succeeded.
"That's mainly because of my failings," he said.
Mr Hatoyama also cited funding scandals involving government aides as a reason for his departure.
He said he had asked Ichiro Ozawa, the party's secretary general who has previously been linked to a donations scandal - to go too, saying he wanted to create "a fresh and clean DPJ".
Mr Ozawa is known as the "Shadow Shogun" for his power behind the scenes of Japanese politics.
"Our politics must break with money," said Mr Hatoyama. "We must become completely clean in order to revitalise our party."
Coalition splits
Mr Hatoyama had been under pressure to quit since last week when it was confirmed that the deeply unpopular Futenma US base would be staying on the southern island of Okinawa.
Okinawa is home to more than half of the 47,000 American troops based in Japan.
Many islanders resent the high military presence and have been angered by incidents involving US troops stationed there, including the rape of a 12-year-old Japanese girl in 1995.
For months Mr Hatoyama had searched fruitlessly for an alternative location to fulfil a pledge to move the base off the island or even out of Japan altogether, our correspondent says.
When he failed his governing coalition split - a coalition member was fired from the cabinet for refusing to back the decision.
The DPJ's next leader will have to take the party into mid-term elections to the upper house of parliament expected next month.
Possible successors include Deputy Prime Minister and Finance Minister Naoto Kan, with Foreign Minister Katsuya Okada and Transport Minister Seiji Maehara also seen as possible contenders.
Okinawa is the focal point of the security treaty between the US and Japan which has balanced military power in north-east Asia since World War II.
Under the pact, Japan - which is prevented from maintaining a war-ready army by its constitution - subsidises the US military presence while the US guarantees Japan's security.
