"I have made the decision and am formally submitting my resignation," Yanukovych said.

Yanukovych's refusal to step down as prime minister sparked mass rallies against him in the capital Kiev.

At the same time he refused to admit defeat in Sunday's re-run presidential election, won by pro-Western candidate Viktor Yushchenko. Yanukovych is preparing an appeal of that election's outcome to Ukraine's highest court.

"We are still fighting, but I don't have much hope," he said in his New Year's Eve address.

The Supreme Court rejected Yanukovych's complaints Thursday about the conduct of the election.

Preliminary final results from Ukraine's Central Election Commission put Yushchenko's margin of victory at 8 percent over the outgoing prime minister.

Yushchenko cannot be proclaimed the winner until his rival exhausts all legal possibilities to challenge the election results.