Japan's prime minister, Yoshihide Suga, has said he will not run for re-election as party leader this month, signaling the end of his tenure, BBC reports.
Mr Suga had been appointed to the role just a year ago following the resignation of Shinzo Abe.
The shock announcement comes as Mr Suga's approval ratings dropped to an all-time low.
Japan - which is still under a state of emergency - is now grappling with its worst ever Covid wave.
The country, which has now seen more than 1.5 million virus cases, has also seen a slow vaccination roll out.
The decision to host the Olympics Games this year despite the worsening pandemic also proved to be hugely unpopular.
"Today at the executive meeting, [Mr] Suga said he wants to focus his efforts on anti-coronavirus measures and will not run in the leadership election," said the secretary general of Mr Suga's Liberal Democratic Party (LDP), according to an AFP report.
"Honestly, I'm surprised. It's truly regrettable. He did his best but after careful consideration, he made this decision," he said.
Japanese shares rose sharply on the news, with the broad Topix stock index closing up by 1.6% after hitting its highest level in three decades.
Tokyo's financial markets had made gains already this week on hopes for a stronger government ahead of the ruling party's leadership race and a general election later in the year.
The ruling LDP is due to hold an election on Sept 29 to pick its president. The winner of the leadership election is widely expected to be Japan's leader as the LDP holds a parliamentary majority.