While a US court will on Thursday hear the bail plea of Dominique Strauss-Kahn, the head of the International Monetary Fund, who has been charged with a criminal sex act said he was resigning as its chief.
Meanwhile, the victim has testified that 'there was nothing consensual' about the assault.
Strauss-Kahn is locked up in a New York prison since Saturday when he was bundled out of a Paris-bound flight and taken into custody on charges of sexually assaulting a chambermaid at a Manhattan hotel.
"Dominique Strauss-Kahn has informed the Executive Board of the International Monetary Fund of his intention to resign as managing director with immediate effect," the IMF said in a statement after it received a formal letter in this regard from Strauss-Kahn.
In his letter Strauss-Kahn maintained his innocence and said he would fight off the charges.
"It is with infinite sadness that I feel compelled today to present to the executive Board my resignation from my post of managing director of the IMF," he wrote.
The IMF said John Lipsky, First Deputy Director, remains the acting MD of the agency.
"I think at this time first of my wife -- whom I love more than anything -- of my children, of my family, of my friends. I think also of my colleagues at the Fund, together we have accomplished such great things over the last three years and more," the former MD wrote in his resignation letter.
"To all, I want to say that I deny with the greatest possible firmness all of the allegations that have been made against me.
"I want to protect this institution which I have served with honour and devotion, and especiallyespeciallyI want to devote all my strength, all my time, and all my energy to proving my innocence," he said.
The IMF said in a statement that it will communicate in the near future on the executive board's process of selecting a new Managing Director.
On Wednesday, the alleged victim, a 32-year-old chambermaid, testified against Strauss-Kahn that 'there was nothing consensual' about the assault that allegedly took place on Saturday in a Manhattan hotel room, ABC News reported.
"There was nothing that took place in that hotel room which in any way could be construed
"This woman was absolutely the victim of a physical and sexual assault," he said.
A bail hearing is set for Thursday, FOX News reported.
Strauss-Kahn's lawyers indicated that he would be willing to be confined to a location in Manhattan and wear an electronic ankle bracelet to monitor his movements, and was prepared to post $1 million cash bail, The New York Times reported on Wednesday.
He is currently being held in Riker Island prison on suicide watch.
Strauss-Kahn, 62, has been charged with a criminal sex act, attempted rape and unlawful imprisonment.
He allegedly forced the maid, who is a native of Guinea, to perform oral sex and submit to anal sex.
It also emerged that in 2007 French President Nicholas Sarkozy had warned Strauss-Kahn to watch his behavior when he became the chief of the International Monetary Fund.
"Over there [US] they don't joke about this sort of thing," Sarkozy had told Strauss-Kahn, The Times in Britain reported.
"Your life will be passed under a magnifying glass.
"Avoid taking the lift alone with interns. France cannot permit a scandal," Strauss-Kahn was told.
After the news broke, Sarkozy reportedly rolled his eyes and said, "We did warn him."
Strauss-Kahn, a socialist politician, was seen as a possible contender in the 2012 elections, who could oust Sarkozy from power.
Strauss-Kahn was taken into custody a few minutes before his Air France flight departed for Paris, on late Saturday afternoon.
He denies wrongdoing.
His lawyers have said that the sex was consensual.
It also emerged on Wednesday that the maid lives in a building, which is exclusively for people with HIV or AIDS, The New York Post first reported.
The woman, whose name is being kept a secret, is reportedly a widow. She lives with her 15-year-old daughter in The Bronx.
Image: Dominique Strauss-Kahn