Getty Prime Minister Gunnlaugsson resigned today after tens of thousands called for him to leave on Monday

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Sigmundur David Gunnlaugsson and his wife are accused of using an off-shore firm to dodge tax after his personal financial details were revealed following the leak of 11.5million documents from Panama law firm Mossack Fonseca. The leader yesterday refused to quit, prompting tens of thousands of furious protesters to take to the streets in front of the parliament building in Reykjavik where they hurled yoghurt, eggs and bananas at the building as they chanted for him to go. WHAT ARE THE PANAMA PAPERS? EXPLAINED

I do not think it is normal that the prime minister alone should be given the authority to dissolve the parliament without the majority of the parliament being satisfied President Grimsson

He is the first major casualty following the leaked papers over the weekend which involve hundreds of some of the world's richest and most famous people. Icelandic media reports suggest the agriculture minister could step up to replace Mr Gunnlaugsson.

The outgoing prime minister attempted to dissolve parliament and call a general election yesterday but Iceland's President Olafur Ragnar Grimsson refused. Mr Grimsson last night said he needed to speak to all the political parties first.

Getty Tens of thousands of protesters yesterday called for the Iceland PM's resignation

Getty Iceland President Grimsson refused to let the PM dissolve Parliament

He said: "I do not think it is normal that the prime minister alone should be given the authority to dissolve the parliament without the majority of the parliament being satisfied with that decision." The Panama Papers show Mr Gunnlaugsson and his wife bought offshore company, Wintris, in 2007.

Getty The PM is the first major casualty of the Panama Papers leak

When he became prime minister in 2009 he did not declare an interest in the company and eight months later sold his 50 per cent to his wife, Anna Sigurlaug Palsdottir for $1. He claims his wife did not benefit financially and no rules were broken. Wintris was used to invest millions of dollars of inherited money but court records show it had also had significant investments in bonds of three major Icelandic banks which collapsed during the financial crisis which began in 2008.