Prime Minister Mohamed Ghannouchi resigned yesterday after violent protests over his ties to the North African state's toppled former leader, triggering street celebrations in Tunis.
Analysts said the move could add legitimacy to an election to replace President Zine al-Abidine Ben Ali, ousted on 14 January, but could also encourage further opposition demands.
Police fired shots in the air and used tear gas to disperse hundreds of youths breaking shop windows in a commercial district of Tunis shortly after the announcement, while thousands gathered near parliament to celebrate.
Critics have accused Mr Ghannouchi of being too close to former ruler Mr Ben Ali, toppled after a series of protests that sent shockwaves across the rest of North Africa and the Arab world and encouraged a similar uprising in Egypt.
Iraq's Prime Minister yesterday gave his ministers 100 days to improve their performance or risk being fired – an apparent response to a string of protests against poor public services.
Also yesterday, Iraq's parliamentary speaker called for new provincial and municipal elections as a way of addressing the public's growing frustration over corruption, high unemployment and electricity shortages.
Prime Minister Nouri al-Maliki's warning to his ministers and Speaker Osama al-Nujaifi's call for elections came two days after thousands participated in the largest anti-government protests in Iraq since unrest began spreading in the Arab world several weeks ago.
Iraqi leaders appear increasingly concerned that the protests, inspired by uprisings in Tunisia and Egypt, could spiral out of control.
They are now scrambling to show that they are responsive to the public's demands.
Omani police officers fired rubber bullets at stone-throwing protesters demanding political reform yesterday, killing two people, and demonstrators set government buildings and cars ablaze.
Hours after the violence, Oman's ruler, Sultan Qaboos, gave an order to create 50,000 jobs for citizens in the Gulf Arab state of 2.7 million people, 70 per cent of whom are nationals. The trouble in the north-eastern port town of Sohar was a rare sign of discontent in the normally sleepy sultanate.
Witnesses said that more than 2,000 protesters demanding reform had gathered for a second day of unrest in a square in Sohar.