His political rivals, former Maoist rebels, called for the vote against Oli after they deserted his fragile ruling coalition, accusing him of reneging on past deals and following deadly unrest over a divisive new constitution.
“I have decided to open the road to elect a new prime minister in this parliament and presented my resignation to the president,” Oli told lawmakers who were set to vote on the no-confidence motion.
In his speech, the embattled premier accused rival lawmakers of undermining his nine-month-old government, which he said was working to rebuild the Himalayan country after a devastating earthquake last year.
“I am concerned that the steps taken were driven by selfishness and revenge (and they) will cause a long-term negative impact and push the country to instability,” he said of the motion, during the nearly two-hour speech.
Oli’s resignation is the latest crisis to hit Nepal which has been struggling to rebuild the quake last April that claimed almost 9,000 lives.
The former rebels and main opposition Nepali Congress party had said they would try to form a new administration if Oli lost the vote, with Maoist chief Pushpa Kamal Dahal as premier.
Dahal, the country’s first prime minister after the Maoist insurgency ended in 2006, pulled his party from Oli’s coalition two weeks ago, leaving it without a majority.
Dahal, better known by his nom-de-guerre Prachanda, painted Oli as an egocentric who refused to listen to the people and demanded that he resign.
After debate on the motion kicked off on Friday, two smaller parties also abandoned the coalition, leaving Oli’s Communist Party of Nepal (Unified Marxist Leninist) floundering for support.
The Maoists joined Oli’s government last October, weeks after Nepal adopted the new national constitution.
Cracks began to appear in the coalition two months ago when the Maoists threatened to topple Oli, prompting the premier to draw up an 11th-hour deal with Dahal.
But Dahal later withdrew from the coalition, citing the government’s failure to implement that agreement to withdraw war cases from Nepal’s courts and offer amnesties to people accused of abuses during the decade-long Maoist conflict.
Since becoming premier, Oli has faced fierce criticism over his handling of protests against the charter, which triggered a months-long border blockade in southern Nepal by demonstrators from the Madhesi ethnic minority.
More than 50 people died in clashes between police and protesters, who said the constitution left them politically marginalised.
The new constitution, the first drawn up by elected representatives, was meant to cement peace and bolster Nepal’s transformation to a democratic republic after decades of political instability.
But ongoing discussions between the government and protesters over the charter have failed to yield agreement.
Kathmandu accused New Delhi of imposing an “unofficial blockade” on the landlocked nation in support of the Madhesis, who share close cultural and family links with Indians across the border.