President Abdrabuh Mansur Hadi has accepted Bin Mubarak's "request to be relieved" of forming a new government which is stipulated by a UN-brokered peace deal, Saba state news agency said.
Bin Mubarak took this decision "in a bid to preserve the national unity and protect the country from divisions," Saba said citing a letter sent by the PM-designate to Hadi.
The Huthi rebels, officially known as Ansarullah, have agreed to cancel protests that they had earlier pledged to stage today, Saba said.
The accord provided for a rebel withdrawal from Sanaa once a neutral premier was named, for their disarmament and for the political transition to be revitalised.
But the rebels swiftly condemned Bin Mubarak's appointment, saying it is against the "will of the nation" and "at the behest of outside forces", an apparent reference to US and Saudi influence.
"This decision has violated all the principles agreed upon by all parties," the rebels said in a statement on Wednesday.
Five candidates had been shortlisted out of 21 candidates, before Hadi reduced the number to three during a meeting with seven advisers, including a rebel representative who left the gathering in protest.
An aide to Hadi accused the rebels of rejecting the decision because "they do not want to keep their commitments" under the peace deal.
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