Prime Minister Bohuslav Sobotka said he had changed his mind about resigning with his government (Ondrej Deml/CTK via AP)

The Czech Republic's prime minister has changed his mind about resigning with his government and instead wants to solve a political crisis by firing his finance minister.

Bohuslav Sobotka triggered a crisis on Tuesday by announcing he would resign over the business dealings of finance minister Andrej Babis.

He said the minister, a billionaire businessman, had not properly explained suspicions that he avoided paying taxes.

Mr Babis denied any wrongdoing. He is a rival of Mr Sobotka's leftist Social Democrats and heads a centrist movement that is a favourite to win October's parliamentary elections.

Mr Sobotka said he had changed his mind after President Milos Zeman - an ally of Mr Babis - tried to accept only his resignation and not the whole government.

AP