Alenka Bratusek, a 44-year-old financial expert who has sought to guide the small Balkan nation through euro-zone economic turmoil, was stepping down after losing the leadership of her Positive Slovenia party to Mayor Zoran Jankovic of Ljubljana, the capital.
Bratusek has said she could not lead her centre-left government without the party's support. Meanwhile, coalition partners have threatened to leave the government because Jankovic faces a corruption probe.
Bratusek said after a meeting with allied parties today that snap legislative elections in June was the best way out of the political troubles. Her formal resignation is expected on Monday. Lawmakers will then decide whether to go to elections or try to choose a new government.
Bad bank loans are at the center of crisis in the Alpine euro zone nation, once considered a model of eastern European transition from centralised economy to free market.