A former minister, Peddireddi is a known detractor of Kiran Kumar Reddy in their native Chittoor district.
Peddireddi had set November 29 as deadline for the Congress high command to replace the Chief Minister.
With no indication of a leadership change, Peddireddi announced in Chittoor today that he would tender his resignation as MLA tomorrow.
He, however, announced he would continue in Congress.
Peddireddi's resignation might push the Kiran Kumar Reddy government into a further awkward position as three MLAs have already quit the party and joined YSR Congress.
Their resignations are, however, pending with the Assembly Speaker.
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If these resignations are accepted, Congress' strength in the 294-member Assembly will fall to 149, just one more than the "magic figure" of 148.
This will place the government in a perilous position in the event of a no-confidence motion in the assembly as the seven-member Majlis-e-Ittehadul Muslimeen (MIM) has already withdrawn its support to the Congress dispensation.
YSRC, which claims some more MLAs from the ruling party are ready to jump to its side, is seeking to move a no-trust motion in the assembly during the winter session.
It is trying to muster enough numbers for the purpose as it has 17 MLAs of its own and the support of eight "rebels" from Congress and TDP. It will need the backing of another five MLAs to ensure the no-confidence motion is taken up for debate in the House.
YSRC is pinning hopes on MIM for this, party sources said.