Yemeni Prime Minister Mohammed Basindawa resigned Sunday amid week-long deadly clashes between the army and Shia rebels here in the capital, a media report said.
Basindawa informed the president and the Shia Houthi group about his resignation, Xinhua reported citing state-run Saba news agency.
President Abd-Rabbu Mansour Hadi Sep 2 announced a peace initiative, in which he promised to replace the government and appoint a new prime minister within a week, in order to end mass protests led by the Houthi group.
Tens of thousands of supporters of the Shia group rallied in Sana'a since early August, demanding the government to resume fuel subsidies and resignation of the cabinet.
The protesters also set up sit-in tents around many ministries. The Houthi group mobilised thousands of armed fighters in Sana'a.
However, the rebels rejected the initiative and launched a military offensive against the army and the Sunni Islah party, which plays a key role in the cabinet.
Hadi's decision also sparked a spat in the government and the prime minister refused to resign earlier this month.
Deadly clashes broke out Tuesday in northwestern Sana'a that killed more than 200 people, including about 50 civilians, till Sunday.
Security sources told Xinhua that the rebels have taken control of Iman University, run by the Islah party, and barracks of 1st Armoured Division, led by General Ali Mohsen al-Ahmar who supported a 2011 uprising that forced former president Ali Abdullah Saleh from power.
Thousands of people fled their homes to southern Sana'a and other provinces, after the rebels took control of Wadi Dhahr and Shamlan areas in the city's north.
However, thousands of families were still trapped in areas where electricity was cut for four days, waiting for the government to reach a ceasefire deal with the Houthi group.
The rebels also seized the national TV and forced the Sana'a International Airport, the country's biggest, to suspend incoming and outgoing flights since Friday.
UN envoy to Yemen Jamal bin Omar said Saturday that he had brokered a ceasefire deal between the Yemeni government and the Shia Houthi group, without mentioning when the two sides would sign on it.
At a press conference held in Sana'a, he said: "An agreement has been reached, following intense consultations with all the political parties, including Shia Houthi group, to resolve the current crisis based on the outcomes of the National Dialogue Conference.
"Preparations are currently underway for the signing of this agreement. This agreement shall be a national document that will advance the path of peaceful change, and will lay the foundations for national partnership and for security and stability in the country."
Sources at the government and the Houthi group said that Hadi Sunday sent a plane to the northern Saada province, the stronghold of Houthis, to take Houthi representatives to Sana'a to sign the ceasefire deal. The Houthi representatives were on their way to Sana'a Sunday.
However, the sources did not say whether or not the Houthi group would sign on the agreement.
The Houthis have been fighting against the Yemeni army in the country's north for years. The last ceasefire deal between the rebels and government was reached in 2010, after a six-year war during which the rebels took control of Saada province.
However, the group started to further its influence to south in late 2013 when it provoked sectarian conflicts in the northern Amran province, only 60 km north of the capital.
After it defeated the army and Sunni militia in Amran, the group advanced to the capital, taking a string of towns and cities in the past weeks.
