The anti-immigration party, Norway’s third-largest, is one of Prime Minister Erna Solberg’s four coalition members.
Norwegian Finance Minister Siv Jensen and her right-wing Progress Party will resign from the government over a cabinet decision to help bring a woman suspected of Daesh affiliation back home to Norway, Jensen said on Monday.
The resignation robs Conservative Prime Minister Erna Solberg of her parliamentary majority and could make the country more difficult to govern, but Solberg is still expected to remain in office as head of a minority coalition.
"I brought us into government, and I'm now bringing the party out," Jensen told a news conference.
There had been "too many compromises," Jensen said, while adding she wants to have a close dialogue with the prime minister in the future.
Jensen's departure was triggered by the decision, announced last week, that the Norwegian woman and her two children would receive help to return to Norway from Syria so that one of the children could receive medical treatment.
The woman, who left Norway in 2013, was arrested on her return on suspicion of being a member of the Daesh group that briefly controlled a territory the size of Britain across Iraq and Syria.
While Progress had offered to help the children, the populist party sought to deny any government assistance for adults seeking to return home after joining militant groups abroad or marrying foreign fighters.
Decisions on whether to help women with Daesh ties return from Syria has caused controversy in Europe, including in Finland where the recently appointed government settled on a compromise to decide each case individually.
The Norwegian woman, who has not been named, has denied the charges against her and will fully cooperate with police during interrogation, her lawyer has said.
Jensen's exit, along with six other Progress cabinet ministers, leaves Solberg with a string of posts to fill, including that of oil and energy minister to oversee Western Europe's biggest oil and gas industry.
At the Finance Ministry, the new appointee will chart the course for the world's largest sovereign wealth fund, with assets of $1.1 trillion.
Norway's constitution does not allow early elections, and the next vote for parliament will take place in September 2021.
All four parties in Solberg's coalition currently struggle in the polls, including Progress which is stuck at around 10 percent support, down from more than 20 percent a decade ago.
Jensen herself recently admitted that the government looked "grey and dull," with the party's image diluted by compromises with centrist parties that don't share its penchant for tax cuts and less immigration.