Sam Rainsy, who has been at the forefront of the kingdom's opposition movement for two decades, announced his resignation from the Cambodia National Rescue Party (CNRP) in a letter posted on social media late Saturday.
His surprise departure casts new doubt over the prospects of a party that poses the only viable challenge to PM Hun Sen's authoritarian government in local elections in June and a 2018 general poll.
Rainsy, who has been living in self-imposed exile since 2015 to avoid convictions and charges he says are politically motivated, did not elaborate on the reasons for his resignation.
But analysts say it was an attempt to dodge legislation recently proposed by Hun Sen's government that would bar convicts from serving as party leaders and could lead to the CNRP's dissolution if Rainsy stayed on.
After a party meeting Sunday spokesman Yim Sovann told reporters a new chief would not be selected until April 2018, months before the scheduled national poll.
Rainsy's deputy Kem Sokha will continue to serve as acting leader and guide the party through the local polls, he added.
The spokesman hailed Rainsy's resignation as an act of "devotion" to the party to protect it from "demolition".
The CNRP made significant gains in the last 2013 national election, riding a wave of frustration over the endemic corruption and rights abuses under Hun Sen's 32-year rule.
But the party has been hampered since then by an onslaught of lawsuits that rights groups say is part of the strongman's crackdown on critics as he looks to extend his grip on power.
Political analyst Ou Virak called Rainsy's step-down a "new low" for a party that has been floundering under mounting pressure from Hun Sen.
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