By Hasmik Mkrtchyan
YEREVAN (Reuters) - Armenian Prime Minister Serzh Sarksyan resigned on Monday after almost two weeks of mass street protests that have plunged the ex-Soviet republic into political crisis.
Sarksyan, a close ally of Russian President Vladimir Putin, had served as Armenia's president for a decade until this month and had faced accusations of clinging to power when parliament elected him as prime minister last week.
Under a revised constitution, the prime minister now holds most power in the southern Caucasus nation, while the presidency has become largely ceremonial.
Pressure on the 63-year-old to quit had increased sharply on Monday when unarmed soldiers in the capital Yerevan joined the anti-government protests, which first erupted on April 13.
Though peaceful, the tumult has threatened to destabilise Armenia, a Russian ally in a volatile region riven by its decades-long, low-level conflict with Azerbaijan. Moscow, which has two military bases in Armenia, was closely watching events.
"I got it wrong," Sarksyan said in a statement.
"In the current situation there are several solutions, but I won't choose any of them. It's not my style. I am quitting the country's leadership and the post of prime minister of Armenia."
He said he was bowing to protesters' demands and wanted his country to remain peaceful.
Former Armenian prime minister Karen Karapetyan, an ally of Sarksyan from his ruling pro-Russian Republican Party, was named as acting prime minister, the government said in a statement.
President Armen Sarkissian accepted the prime minister's and the government's resignation.
Armenia's political parties in parliament now have seven days to put forward the name of a new prime minister. Sarksyan's allies remain in key positions in the government and it remains unclear whether his resignation will herald any real change.
Protesters loudly celebrated Sarksyan's resignation.
Some hugged policemen in the street amid cheers, others beeped car horns, and some danced and drank.
"It's the happiest day in my life," said 20-year-old student Karine Stepanyan. "We showed to the entire world that our country's destiny is in hands of Armenian people."
Tens of thousands filled the capital's central Republic Square, waving national flags, blowing vuvuzelas and chanting:"Victory!"
"The first stage of our revolution is over - prime minister has resigned," Nikol Pashinyan, a lawmaker regarded as the main opposition leader, said to loud applause from the crowd.
On Sunday police had detained him, two other opposition leaders and nearly 200 protesters, drawing a rebuke from the European Union. [nL8N1RZ05H] Police released Pashinyan and others on Monday.
Pashinyan said he would hold talks with Karapetyan to discuss what happens next.
"We are ready to continue talks with acting prime minister Karen Karapetyan on Wednesday to ensure a transfer of power to the people," Pashinyan told tens of thousands of supporters.
"I hope that the high echelons of the (ruling) Republican Party will unequivocally recognise the popular velvet and non-violent revolution," he said.
Early parliamentary elections should be held, he said.
The protests which toppled Sarksyan lasted for 11 days and saw tens of thousands of protesters march through Yerevan and other towns, blocking streets and staging sit-ins that disrupted daily life.
Asked about the crisis on Monday before Sarksyan's resignation, the Kremlin called Armenia an "extraordinarily important country" for Russia, but dismissed the idea it might intervene, calling the crisis a domestic matter.
Last week Putin rang Sarksyan to congratulate him on becoming premier. As president, Sarksyan took Armenia, a country of about three million people, into a Russia-backed economic bloc and bought weapons from Moscow.
The protesters' complaints were mainly domestic and focused on pervasive corruption and poverty in a country that won independence from Moscow in 1991 but has been hampered by its conflict with Azerbaijan over the breakaway region of Nagorno-Karabakh and other issues.
But critics have also accused Sarkasyan of moving landlocked Armenia too close to Russia at the expense of better ties with the West and increased prosperity, and it was unclear whether his political demise could lead to a change in foreign policy.
Armenia's 2025 dollar-denominated bond fell 0.83 cents after Sarksyan said he would resign, hitting a one-year low.
(Additional reporting by Margarita Antidze in Yerevan, Writing by Andrew Osborn and Margarita Antidze, Editing by Gareth Jones and Angus MacSwan)