Congress spokesperson Sushmita Dev said the party has also urged the Election Commission not to postpone or cancel Anantnag assembly bypoll.
The Congress leader alleged that the entire situation in the Valley is deteriorating ever since this government came to power and said Jammu and Kashmir has gone back by 15 years.
"The alliance in Jammu and Kashmir has been against the general will of the people and it is an unholy alliance between PDP and BJP. We believe that PDP-BJP government has clearly failed the litmus test of security and maintaining law and order...
Dev said the reason for demanding the chief minister's resignation is "not to politicise" the situation in Jammu and Kashmir.
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"But, if there is any Kashmir policy of this government at all, it has totally failed," she said.
She said if the government cannot instill confidence in the people of the country that they go out and vote freely, it has no reason to be in place.
"It is a failure of not just the government but it is the failure of democracy," she said, adding it is the government's duty to create such an atmosphere that people come out and vote.
"By actually not voting, the people of the state have shown a no-confidence in the government. The chief minister should step down immediately on these grounds," she said.
Eight people were killed during polling in firing by security forces in Srinagar Lok Sabha bypoll yesterday where only 7.14 per cent of electorate came out to cast their vote.
In the wake of demands made by Anantnag PDP candidate Tassaduq Mufti to postpone the Anantnag assembly bypoll slated for Wednesday, Dev said it is the duty of the government to hold elections on time and allow people to cast their votes.
Tassaduq has appealed to the Election Commission to postpone the Lok Sabha bypoll in the constituency in view of large-scale violence during polling in Srinagar.
"My appeal to the EC is to postpone the polls till the situation improves. It is my request," Tassaduq, who is Chief Minister Mehbooba Mufti's younger brother, said at a press conference in Srinagar.
Anantnag Lok Sabha constituency is spread over four districts of Kulgam, Pulwama, Shopian and Anantnag.