The prime minister of East Timor has sent a letter of resignation to the president, he said on Tuesday, as the tiny Southeast Asian nation faces new political instability after the collapse of a coalition supporting him in parliament.

Prime Minister Taur Matan Ruak has repeatedly failed to secure passage of a budget for 2020 after the largest party in his coalition, the National Congress for Timorese Reconstruction (CNRT) party of independence hero Xanana Gusmao, withdrew support.

"I have sent a [resignation] letter to the president," Ruak told reporters after meeting President Francisco Guterres.

He said he was prepared to stay in office until the resignation was accepted "to guarantee government activities in our country".

Ruak has only served as prime minister since June 2018, following the collapse of two previous governments.

On Saturday, Gusmao, East Timor's first president and a former prime minister, announced a new six-party coalition controlling 34 seats without Ruak's party that he said would prepare to form a new government.

"It is set up to resolve the current political deadlock,” he told a news conference. "These six political parties met to put hands together in order to go ahead and form a new government."

East Timor is one of the world's poorest countries. Ruak was once a guerrilla fighter in the former Portuguese colony later annexed by Indonesia, which launched a brutal 24-year occupation.

When Indonesia finally left in 1999 following a UN-supervised independence referendum, more than 80 percent of the country's infrastructure had been destroyed.

The country became fully independent in 2002 after three years of UN administration.