Clark has asked the party to choose a new leader, a move that sets the stage for his retirement after his leadership came under fire.
Clark told reporters he plans to stay on until a leadership convention is held, likely next year. But he said party polls -- not unhappy members -- convinced him to leave.
"The good news is that I am widely trusted and popular," Clark said. "The bad news is that we cannot translate those qualities into votes for the party."
With his decision, Clark, 63, won't have to face a leadership review vote at the party's national convention in Edmonton later this month. But there's still a chance he may lead the party in the next election.
He said he has given his party's executive two options. One would see him remain as leader should the governing Liberal Party called a snap election later this year or early next.
The other option would see him retire when a new leader is elected. Party organizers likely wouldn't be able to hold a convention until next year.
"This is not a walk in the snow," Clark said, a reference to a winter stroll former Liberal Prime Minister Pierre Trudeau took before deciding to resign as party leader in February, 1984.
"It has taken longer than that," he added. "Since the House (of Commons) rose in June, I have been reflecting on how I might best serve my party and country."
His announcement in a letter to the party executive brought a quick response from Canadian Alliance leader Stephen Harper, who repeated his offer made earlier this year. He suggested that the right wing parties unite, form a coalition in the House of Commons and run a single leadership slate in the next federal election, which must be held in 2005, if not called earlier.
Clark served as Canada's 16th -- and, at 39 years old, its youngest ever -- prime minister. But his tenure was a brief one. His government lasted just eight months before it was brought down in a budget vote.
In 1998, Clark successfully ran for the party's leadership again, but was criticized for not taking a seat in Parliament until he won a by-election in the province of Nova Scotia two years later.
A former minister in Clark's government, Heward Grafftey, has already indicated he plans to run for the Tory leadership.
Whoever ends up filling his shoes could find it tough going drumming up voter support. A recent poll found the Tories have just 14 percent voter support, while the Liberals have 46 percent and the right-wing Canadian Alliance has 17 percent.
The Conservatives aren't the only Canadian political party in flux.
The left-wing New Democratic Party is scheduled to elect a new leader in January, after Alexa McDonough announced her resignation.
The Canadian Alliance's Harper is relatively new in the job, after beating predecessor Stockwell Day, whose gaffes party faithful blamed for losing the 2000 federal election.
But Clark may not be the last leader to lose his or her job.
Chretien has been in the job for almost 10 years, but is increasingly under fire from within party ranks.
The latest call for his resignation comes from a new Liberal member of Parliament he himself wooed to federal politics.
"If Jean Chrétien woke up tomorrow ... and said, 'I think it's time to leave room for others,' I sincerely think there would be a general relief on the part of everyone," Liza Frulla told a French-language all-news channel over the weekend.
Despite the pressure, the 68-year old prime minister hasn't said yet whether or not he will lead the Liberals into a fourth general election.