In an address on state television, Nasheed said that it would be better for the country in “the current situation” if he stepped down.
"I don't want to run the country with an iron fist. I am resigning," he said.
Mutinying police in Male took over the state broadcaster today and broadcast an opposition-linked station's calls for people to come on the streets to overthrow the president, witnesses said.
Tensions had escalated after the army arrested a senior judge last month, prompting bitter street protests in the Indian Ocean island chain.
The violence is the worst in a struggle between Nasheed, widely credited with ushering in full democracy with a 2008 election win, and former president Maumoon Abdul Gayoom, whose 30-year rule was widely seen as autocratic.
Sources from Nasheed’s office told journalists in Colombo that a protest had also taken place in front of the Maldives National Defence Force (MNDF) headquarters. Nasheed was safely inside the headquarters and in control of the military, a presidential source told correspondents in Colombo. A handful of MNDF soldiers were also taking part in the demonstration of several hundred people outside the headquarters, along with police who defied orders to break up opposition protests earlier today.
Maldives opposition urges military to detain Nasheed
A Maldives opposition leader said he had asked the military to detain Mohamed Nasheed following his resignation.
"We have asked the military to keep (Nasheed) in protective custody, to face charges of corruption and misuse of power," Hassan Saeed, who leads the Dhivehi Qaumee Party, told AFP by telephone.
"His rule was tainted with nepotism and corruption, often breaching the constitution," Saeed said, hours after Nasheed announced his resignation in a televised press conference.
"Nasheed's resignation gives us a chance to restore the rule of law and judicial independence. Nasheed squandered a golden opportunity to build a nation."
Nasheed, 44, who was educated in Sri Lanka and Britain, came to power in 2008 after building a pro-democracy movement with local and foreign support in opposition to the 30-year autocratic rule of Maumoon Abdul Gayoom.
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Another Muslim country falls....