The Irish foreign minister has tendered his resignation and is to vote against Prime Minister Brian Cowen in a vote of confidence on Tuesday.
Micheal Martin, seen as a rival for the leadership of the ruling Fianna Fail party, said that Mr Cowen had told him his resignation was not necessary, the BBC reports.
However, Mr Martin said he believed a new leader was needed before a general election.
Earlier, Mr Cowen said he would stay on as party leader, despite calls to step aside, but would offer colleagues a secret confidence ballot.
He has faced accusations over ties with disgraced former bankers, which revived allegations that Fianna Fail was too close to the people who helped precipitate Ireland's financial meltdown.
Mr Cowen, who took power in 2008, came under recent scrutiny about a meeting with the head of Anglo Irish Bank shortly before he announced a multi-billion euro bank guarantee.
He said his decision to remain was in the national interest, which was "paramount" in difficult times, the BBC reports.
Mr Cowan's coalition government has only a slim minority in parliament and a general election is expected in March.