The officials held a closed-door plenary session in the afternoon to tender their resignations.

Although the Cabinet has resigned, all members must stay on in the caretaker administration until transferring their responsibilities to members of the new Cabinet.

The routine administrative work will not be disrupted for even a single day, Chen Chin-jun, secretary-general of the Executive Yuan, quoted Premier Chang as saying.

The Cabinet's move came after President Chen Shui-bian's ruling Democratic Progressive Party suffered a humiliating defeat at the hands of the opposition Kuomintang (KMT) in the Jan. 12 election for seats in the new Legislative Yuan.

In that poll, the DPP picked up only 27 seats in the 113-seat parliament. The KMT won 81 and the five others went to Nationalist allies.

The resignation of the Cabinet came several days earlier than originally scheduled.

"We want to give the president more time to consider new appointments, so we are resigning," said Cabinet Secretary-General Chen Chin-jun.

Local media reports said that Premier Chang decided to step down earlier, mainly because he was unhappy with the intervention in administrative affairs by DPP presidential candidate Frank Hsieh.

Hsieh recently pushed for several vote-winning measures, including the government paying national health insurance (NHI) premiums owed by low-income people, and slashing the ceiling for the inheritance tax to 10 percent from the current 40 percent.

In the morning, Hsieh and President Chen held a meeting to exchange views on the new lineup for a new Cabinet.

There were reports that Hsieh wanted to consult with the KMT, which will now dominate the parliament, on the selection of a new premier who is acceptable to both the DPP and KMT.

Hsieh personally also prefers to have a CEO (chief executive officer) of a business organization to be the new premier.

When asked to comment on Hsieh's reported intentions, KMT leaders cast doubt on Hsieh's interest in consulting with them on the new premier.

They said the DPP never consulted even once with them when President Chen changed six premiers in the past seven years.

Outgoing Premier Chang's stepping down marks his second time quitting the same post. When he assumed premiership the first time in late 2000, he proclaimed a "Taiwan double" project, promising to double the per capita income of Taiwan's people.

In fact, the real take-home wages and salaries for college graduates continued sliding while the jobless rate for higher educated people shot to new highs in the past several years.

KMT presidential candidate Ma Ying-jeou, who is a heavy favorite to win the race on March 22, said he respects the president's choice of a new premier.

But he stressed that whoever gets the premiership will only temporarily hold the post in a caretaker government.

If wins the presidential race, he will reshuffle the Cabinet when taking office on May 20.