KUALA LUMPUR Malaysia's finance minister, Daim Zainuddin, has resigned, Prime Minister Mahathir Mohamad said Saturday in an announcement that ended months of speculation about the powerful minister's future.

Mahathir told reporters that Daim tendered his resignation letter Friday but had given no reasons for quitting. There has been strong speculation of a rift between the two men, who have been close associates for two decades.

"Two months ago he asked to resign but I told him to go on leave first and reconsider his decision," Bernama news agency quoted the premier as saying.

Mahathir announced on April 19 that Daim was taking two months' leave because he may be "tired."

The finance minister had been going into his office during his leave and attending some official functions. But he skipped meetings of the cabinet and those of the ruling party -- fuelling the rumors of a falling-out.

Mahathir said he had not thought about a successor yet. Jokingly he added: "If anyone wants (the job)..."

Asked whether he accepted the resignation, Mahathir said: "I accept... He asked 10 months ago."

Daim, 63, was widely considered Malaysia's most powerful man after Mahathir and was born in the same village as the premier.

But there were persistent rumors of disagreements in recent years although both men denied it. The finance minister took "leave" in April around the time Mahathir appointed former Central Bank Governor Ali Abul Hassan Sulaiman as one of his own economic advisers.

Daim could not immediately be reached for comment.

It was unclear how much political damage the resignation would do to Mahathir, who completes 20 years in power next month.

"It is a blow because Daim was very close to Mahathir," one diplomat told AFP.

"But he was unpopular... If he is out of the cabinet people might take it more positively."

Daim has twice been credited with pulling Malaysia out of recession, in the mid-eighties and the late nineties.

But he has also been associated in the public mind with a series of unpopular bailouts of politically connected companies -- notably the government's decision to buy back a stake in Malaysia airlines from a private company at twice the current price of the shares.

Colleagues heaped praise on the ex-finance minister.

"Daim is the unsung hero who saved the country from further economic turmoil during the regional economic crisis," said Deputy Housing Minister M. Kayveas.