President Christian Wulff of Germany has resigned after state prosecutors asked parliament to remove his legal immunity over accusations that he accepted favours.
Mr Wulff is embroiled in a scandal over a low interest home loan that he accepted when he was premier of Lower Saxony.
In a brief statement on Friday, he said developments of the past few weeks have shown that the German people's trust and thus his effectiveness have been seriously damaged.
Mr Wulff said, therefore, that it was no longer possible for him continue as president. He had been in the post for less than two years.
Chancellor Angela Merkel cancelled a visit to Italy on Friday to deal with the crisis and said she regretted that he had quit.
The BBC reports political parties will now seek to agree on a new candidate for a repacement.
In the interim, Horst Seehofer of the Christian Social Union in Bavaria will be acting president.
The president's role is largely ceremonial, to serve as a moral authority for the nation. Mr Wulff denies any wrongdoing.
Mr Wulff received a low interest 500,000 euro loan ($US649,000) from the wife of a wealthy businessman in October 2008.
Mr Wulff was later asked in Lower Saxony's parliament if he had had business relations with Egon Geerkens. He said he had not, but made no mention of his dealings with Mr Geerkens's wife.
He has been heavily criticised also for trying to force the Bild newspaper not to publish the story.