Malaysia's finance minister resigns
The official Bernama news agency quoted Mahathir as saying Daim had stepped down, effective from 1 June, and adding the finance chief gave no reason for his decision.
"Two months ago he asked to resign but I told him to go on leave first and reconsider his decision," Mahathir said.
Asked about a possible successor, Mahathir said he had not yet considered it and jokingly asked if anyone wanted the job.
The prime minister said Daim had asked to resign 10 months ago, something he had kept quiet in case Daim changed his mind.
Kuala Lumpur has been speculating on a rift between the two men since the prime minister announced in April that his long-time ally had taken leave due to tiredness.
Cryptic public comments and jokes by both in the past few weeks did nothing to quell speculation Daim was on his way out.
Zahari Ab Wahab, a former UMNO youth treasurer, said that the relationship between the two men went back too far for one to turn on the other.
But if Daim did not go of his own accord, and Mahathir did not push him, the pressure within the party to get rid of the finance minister must have become to great for the premier to resist.
The ruling United Malays National Organisation captured less than half the Malay votes in the November 1999 election, as the country's ethnic majority registered their displeasure with the sacking and jailing Mahathir's rival, Anwar Ibrahim - Daim's predecessor at the finance ministry.
Among the potential candidates to succeed Daim is Entrepreneur Development Minister Nazri Aziz, who stood in for him at cabinet meetings for the last two months. A lawyer by training, Nazri has also held the chairmanship of several companies.
Another could be Bank Negara Governor Zeti Akhtar Aziz, appointed central bank chief a year ago, while assistant governor Awang Adek Hussin has also figured as he moved up the UMNO ladder.
Abdul Ghani Othman, Chief Minister of the economically strong southern state of Johor was another in the frame along with Nor Mohamed Yakcop, one of Mahathir's two economic advisors who is also former senior central banker.
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