The self-declared, Islamist-leaning National Salvation Government, headquartered in the capital, Tripoli, said in a statement it was ceasing its work in the "supreme interest of the nation," in a move to prevent further violence and division and remove the capital "from the specter of armed conflict."
"We inform you that we are stopping our work as an executive power, as the presidency, members of parliament and ministers of the government," read the statement published by Libya's Justice Ministry on Monday.
The announcement came days after the arrival in Tripoli of representatives of a U.N.-backed national unity government, tasked with reconciling competing factions in the troubled North African nation.
Libya descended into chaos in 2011 with the revolution that saw the fall of Moammar Gadhafi, and since 2014, competing bodies have claimed to be the rightful government.
A government formed by the elected House of Representatives is headquartered in the eastern city of Tobruk, while in Tripoli, the Islamist-dominated National Salvation Government has had the backing of powerful militias.
U.N.-backed government seeks control
Last week, representatives of a third body -- the U.N.-backed Government of National Accord -- arrived in Tripoli, with the job of asserting its authority over the nation.
Formed as the result of a U.N.-brokered peace deal in December
, the GNA -- led by Fayez Sarraj, a member of parliament from Tripoli -- was unveiled earlier this year with the task of bringing an end to the civil war, stemming the exodus of Libyans to Europe and stopping the growth of ISIS.
Hundreds of Libyans have recently returned from fighting for the terror group in Iraq and Syria, according to the United Nations, and in February the United States said it killed a senior ISIS operative in a strike on a Libyan training camp for foreign fighters.
Under the terms of the December peace deal, both rival Libyan administrations were supposed to cede power to the GNA, which enjoys strong backing from international powers eager to prevent Libya from becoming a failed state on Europe's doorstep.
But it has been viewed with suspicion, and it remains to be seen how the new administration will assert its authority in a chaotic country where rival militias and tribes hold sway.
Maher Shami, spokesman for the Tobruk-based House of Representatives, said the government there was not ready to cede power to the GNA, as it was yet to be properly consulted on the transfer of power.
It was unclear how strongly the National Salvation Government's statement was supported by the broad range of factions within the now-dissolved body, or what had prompted the move, although key figures in the body have been targeted with sanctions in the past weeks.