Punjab Governor Mohammad Sarwar had severely criticised the government of Prime Minister Nawaz Sharif for its failure to bring the US president to Pakistan.
"Obama's visit to India is a failure of the Pakistan government. The second visit of Obama to India is Pakistan's big failure on foreign affairs front as it should have arranged his visit to Pakistan," Sarwar said in his statement after Obama's trip to India.
Government sources said that the criticism by Sarwar had disturbed Sharif who demanded an explanation but instead the governor chose to resign.
Sarwar handed over his resignation to President Mamnoon Hussain last night, which has been accepted.
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Punjab Assembly Speaker Rana Iqbal will serve as acting governor pending a new appointment by the federal government.
Sarwar on Tuesday had said that it was a "diplomatic failure of Pakistan that US President Obama visited India and signed the all-important civil nuclear deal".
Sarwar became governor after renouncing his citizenship of the UK where he had settled several years ago to become a successful businessman and was the first Muslim lawmaker in the British parliament.
Sharif was also upset with Sarwar for meeting with exiled MQM chief Altaf Hussain in London without his consent.
Besides, Sarwar has close relations with Sharif's rivals - PML-Q chief Chaudhry Shujaat Husain and Pakistan Awami Tehreek chief Tahirul Qadri.