He also said on Tuesday, Jan 27 that he would ask one of Iceland's political parties to lead a minority government until elections in May.
Social Affairs Minister Johanna Sigurdardottir is widely expected to become interim prime minister.
Prime Minister Geir Haarde resigned on Monday, Jan 26 and disbanded the government he has led since 2006 after weeks of public protests at his handling of the economy.
Iceland's banks collapsed in Oct with huge debts amassed during years of rapid expansion. Unemployment and inflation have spiraled.
OneIndia News (With inputs from Agencies)