The announcement follows strong calls from the party for the scandal-plagued Najib Razak to step down over the disastrous election defeat to a four-party opposition alliance headed by veteran politician Mahathir Mohamad.
Former Malaysian Prime Minister Najib Razak says he's resigning as head of his Malay party to take responsibility for the electoral defeat that ended his coalition's 60-year grip on power.
A scandal-plagued Najib, who has been barred from leaving the country earlier on Saturday, told a news conference that he will step down with immediate effect as president of the United Malays National Organisation as well as chairman of the National Front coalition.
He says his deputy Ahmad Zahid Hamidi will take over as president of UMNO, a party that dominates the coalition.
The announcement followed strong calls from the party for the 64-year-old Najib to step down over the disastrous loss in Wednesday's elections.
The National Front obtained only 79 of the 222 parliamentary seats, losing power to a four-party opposition alliance headed by veteran politician Mahathir Mohamad.
Ban on travel abroad
Earlier, Razak said he and his family would respect an immigration department ban on his travel abroad and stay in the country.
Najib had said earlier on Facebook that he and his family were taking a holiday overseas from Saturday and would return next week.
But, moments later, the immigration department said on its official Facebook page that Najib and his wife, Rosmah Mansor, were blacklisted from leaving Malaysia.
TRT World spoke to Jakarta-based journalist Zan Azlee for more details.
"I have been informed that the Malaysian Immigration Department will not allow my family and me to go overseas," Najib said in a tweet after the immigration ban was announced.
"I respect the directive and will remain with my family in the country."
In another tweet earlier Razak said he would take a short break to spend time his family.
After over four decades in politics and the recent election campaign, which was regrettably personal and perhaps the most intense in Malaysian history, I will take a short break to spend time with my family whom I have not seen enough of in recent years.— Mohd Najib Tun Razak (@NajibRazak) May 11, 2018
"I apologise for any shortcomings"
Najib, 64, lost to former Prime Minister Mahathir Mohamad in this week's general election.
Mahathir, previously prime minister for 22 years, was once Najib's mentor but turned against him over a graft scandal and led the opposition challenge to him in this week's election, defeating the coalition that had ruled Malaysia for six decades.
In another tweet, Najib said he was praying that, "after this divisive period", Malaysia would unite.
"I apologise for any shortcomings and mistakes, and I thank you, the people, for the opportunity to lead our great nation."
I pray that after this divisive period, the country will unite. I apologise for any shortcomings and mistakes, and I thank you, the people, for the opportunity to lead our great nation. It has been the honour of my lifetime to serve you and Malaysia.— Mohd Najib Tun Razak (@NajibRazak) May 11, 2018
Mahathir vows to investigate
Mahathir, who was sworn in as prime minister on Thursday, has vowed to investigate a multi-billion-dollar graft scandal at state fund 1Malaysia Development Berhad (1MDB), which was founded by Najib.
News broke in 2015 that about $700 million allegedly stolen from 1MDB had made its way into his personal bank accounts.
He denied any wrongdoing and was cleared by Malaysia's attorney-general, even as US authorities alleged that over $4.5 billion was stolen from the fund in a fraud orchestrated by a financier known to be close to Najib and his family.
US Attorney-General Jeff Sessions called the 1MDB scandal "kleptocracy at its worst" and the fund is the subject of money-laundering investigations in at least six countries, including Switzerland, Singapore and the United States.
Filings by the US Justice Department in a civil lawsuit indicated nearly $30 million of the money stolen was used to buy jewellery for the prime minister's wife, Rosmah, including a rare 22-carat pink diamond set in a necklace.
Two sources told Reuters on Friday that Mahathir will appoint a finance ministry adviser to oversee the recovery of billions of dollars allegedly stolen from 1MDB.
Mahathir said after his victory in Wednesday's election that he would not be looking for a scapegoat in the scandal.
"We are not seeking revenge," the 92-year-old prime minister said. "What we want is to restore the rule of law ... if the law says that Najib has done something wrong, then he will have to face the consequences."
Mahathir is expected to announce his cabinet line-up later on Saturday.