Jordan's King Abdullah has sacked his government and asked his former ex-military adviser Marouf Bakhit to form a new cabinet, state-run Petra news agency said on Tuesday.
King Abdullah's move comes after thousands of Jordanians took to the streets, inspired by widespread riots in Tunisia and Egypt, calling for the resignation of Prime Minister Samir Rifai.
The Royal Palace says Prime Minister Samir Rifai, a wealthy politician and former court adviser, resigned on Tuesday.
King Abdullah said Bakhit would have the task of taking "practical, swift and tangible steps to launch a real political reform process."
Former Jordan Royal Court Chief, Adnan Abu Odeh, told Reuters the move was a response to the demands of the Jordanian people and warned the rioting may spread to other Arab states.
"It's the same virus that afflicted Tunisia, Egypt and is afflicting all Arab states. The difference between one country and another is the [level of] immunity," he said.
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"Hopefully Dr Bakhit will be able to read the scene better than before and to plan for a change, politically and economically ... It's a major step and it will help to stop the protests."
Under fire from an enraged public over high food prices, Rifai announced wage increases two weeks ago to civil servants and the military in an attempt to restore calm.
Protests have spread across Jordan in the last few weeks, with demonstrators blaming corruption spawned by free-market reforms for the plight of the country's poor.
Many Jordanians hold successive governments responsible for a prolonged recession and rising public debt that hit a record $15bn this year in one of the Arab world's smallest economies, heavily dependent on foreign aid.