Mr. O'Neill held a press conference on Sunday in Port Moresby, indicating that he would resign "in the coming days".
After almost eight years in the position, he said he would hand over the leadership to Sir Julius Chan, a 79-year-old who has had two previous stints as prime minister.
The prime minister's resignation is not final until after it is received in writing by the governor general. Mr O'Neill said he would visit the Queen's representative this week, to "clear the way for the parliament to vote for the next prime minister".
