Israeli Finance Minister Binyamin Netanyahu has resigned in protest against this month's planned withdrawal from the Gaza Strip.
Binyamin Netanyahu has been a fierce opponent of the pullout plan
The resignation was announced as the cabinet approved the removal of a first group of Jewish settlers from the area.
Mr Netanyahu, a former prime minister, has been a fierce critic of the pullout plan championed by his Likud party rival, Prime Minister Ariel Sharon.
Deputy Prime Minister Ehud Olmert has been appointed to succeed him.
Mr Netanyahu had threatened to resign last year unless the Gaza plan was put to a referendum but later lifted the ultimatum.
He submitted his resignation letter on Sunday, shortly before the cabinet voted by 17 to five to approve the initial phase of withdrawals.
The three most isolated Gaza settlements - Kfar Darom, Netzarim and Morag - are first in line to be dismantled in 10 days' time.
Mr Netanyahu was quoted on Israeli radio as saying Israel should strive for security - but that withdrawing under fire would only make Gaza a base for terror.
"A unilateral withdrawal without anything in return is not the way," Mr Netanyahu said in his resignation letter.
"I cannot be part of this irresponsible move that divides the people and harms Israel's security and will in the future pose a danger for the wholeness of Jerusalem."
The BBC's Lucy Williamson in Jerusalem says Mr Netanyahu's resignation will give strength to the opposition faced by Mr Sharon but will not in itself stop the pullout from going ahead.
The issue has caused friction between the prime minister and his hardline rival for months, she says.
Mr Netanyahu, 55, is expected to challenge Mr Sharon, 77, for the leadership of the ruling Likud party ahead of the next election.
The Israeli prime minister said the country's economic policy would not be affected by Mr Netanyahu's departure.
Earlier on Sunday, two Israelis were injured in the West Bank when their car came under fire from gunmen north of Ramallah.
One of them, a 10-year-old boy, was reported to be in a critical but stable condition.
A Palestinian militant group, the al-Aqsa Martyrs' Brigade, said it had carried out the attack in retaliation for the killing last Thursday of four Israeli Arabs by an Israeli soldier.
The army said the 19-year-old soldier had deserted in protest at the Gaza withdrawal.
The Israeli government plans to pull more than 8,000 settlers and the soldiers that protect them out of the Gaza Strip.
Israel is also planning to withdraw from four small settlements in the West Bank.
Israel has occupied the West Bank and Gaza since 1967.