A member of a once-banned Islamic group, who was appointed as governor of Egypt's ancient city of Luxor, has resigned after just a week in office.

Adel el-Khayat is a member of the Construction and Development party, the political arm of Gamaa al-Islamiya, which launched armed attacks against the Egyptian state in the 1990s. The group's most infamous attack, in 1997, killed dozens of tourists at Luxor's 3,400-year-old Hatshepsut Temple.

His appointment was roundly criticised by members of the tourism industry in Luxor, and elsewhere in Egypt. Tourism minister Hesham Zezou resigned in protest on Wednesday.

El-Khayat bowed to pressure and stepped down on Sunday. In a brief statement read at a news conference, he said he decided to resign to prevent bloodshed, a reference to clashes between his supporters and opponents outside the governor's office in Luxor.

"I discussed with my brothers from the Construction and Development party, and we agreed that I should present my resignation as Luxor's governor because we don't want bloodshed," he said in a statement.

"We cannot accept the shedding of even one drop of blood for a position that we never wanted."

El-Khayat was one of the 17 provincial governors appointed last week by Egyptian president Mohamed Morsi.

His party calls for strict implementation of Islamic law, which includes banning alcohol and preventing the mixing of the sexes. Workers in a city as heavily dependent on tourism as Luxor worried that such policies would further hurt their business.

Officials of the Construction and Development party said on Sunday that el-Khayat's resignation decision was not made under pressure and that it showed the party's political maturity.

The party has in recent weeks emerged as a strong backer of Morsi against the opposition, which plans massive protests on June 30 to force him out of office.

Leaders of the group have declared the protesters non-believers and have vowed to "smash" them on June 30, the first anniversary of Morsi's assumption of office as the nation's first freely elected leader.