The Dalai Lama has announced he will retire from political life within days.

In a speech posted on the internet and delivered in the northern Indian hill town of Dharamasala, the Tibetan Buddhist spiritual leader said he would ask the Tibetan parliament in exile to make the necessary constitutional changes to relieve him of his "formal authority" as head of the Tibetan community outside China.

The assembly, which meets early next week, is expected to approve his request. Though long-anticipated, the move away from the limelight by one of the world's best known political figures signals a dramatic change.

Analysts and supporters have described the decision of the Dalai Lama, whose office traditionally combines spiritual and temporal roles, as historic.

Kate Saunders, of the International Campaign for Tibet, said the decision meant that "at a perilous moment in the history of Tibet" the Dalai Lama was "expressing his faith in the Tibetan people".

The current Dalai Lama, Tenzin Gyatso, has progressively distanced himself from a direct political role and expressed a desire to live as a simple monk.

"As early as the 1960s, I have repeatedly stressed that Tibetans need a leader, elected freely by the Tibetan people, to whom I can devolve power. Now, we have clearly reached the time to put this into effect," the 76-year-old told an audience at his traditional appearance to mark the anniversary of the Tibetan people's 1959 uprising against communist Chinese authorities in Lhasa, and his own escape to India.

Next week the Tibetan community in exile will vote to elect a new Kalon Tripa, or prime minister, who will, depending on the constitutional changes, take on the Dalai Lama's political functions.

The Dalai Lama, who is revered by his followers as the 14th reincarnation of the Buddha Avalokiteshvara who achieved spiritual enlightenment, said many of his supporters had asked him not to take the step.

"Since I made my intention clear I have received repeated and earnest requests both from within Tibet and outside, to continue to provide political leadership," he said. "My desire to devolve authority has nothing to do with a wish to shirk responsibility. It is to benefit Tibetans in the long run."

The speech, analysts said, was particularly aimed at the 6 million Tibetans living in China. The Dalai Lama and his senior aides have been concerned in recent years about a gulf opening between the views and values of the two communities.

In Thursday's speech the Dalai Lama spoke of recent events in the Middle East, describing them as "remarkable non-violent struggles for freedom and democracy".

"I am a firm believer in non-violence and people power and these events have shown once again that determined non-violent action can indeed bring about positive change," he said. "We must all hope that these inspiring changes lead to genuine freedom, happiness and prosperity for the peoples in these countries."

The Dalai Lama also reminded his audience of the importance of preserving Tibet's environment, a key theme in recent years.

The move has been flagged up on a number of occasions. Last year the he told a conference in Delhi that a new set of political leaders were emerging among exiled Tibetans. Since 1960 an assembly has been elected by voters in exile but only since 2001 the office of prime minister has been elected too. For the coming polls, 80,000 voters have registered in India, Nepal, Bhutan, US, Europe, Australia and elsewhere.

As unrest rippled through Tibetan areas in 2008, the Dalai Lama threatened to resign as leader of the administration in exile if violence continued.

Two years ago, the German news magazine Der Spiegel asked him whether it was possible to resign his position, given that Tibetans believe him to be the latest reincarnation in a long line of religious leaders. He told them he would "no longer play a political role or a pronounced spiritual role".

The question of the spiritual succession is highly controversial and has the potential to spark serious fractures within the Tibetan community. Chinese authorities are likely to exploit any opportunities offered by the transition of power.

The Dalai Lama is considering ways of averting any succession crisis, possibly through the unprecedented step of seeking his own reincarnation.

The Tibetan emigré community is keen to anticipate the moves Chinese authorities are likely to make when the Dalai Lama dies.

Beijing insists it has the right to approve the reincarnations of the senior Tibetan monks and has said the next Dalai Lama will be born in China.

But the Dalai Lama has suggested that since he is likely to die in exile, he will also be reincarnated there.

China's foreign ministry spokeswoman, Jiang Yu, said the Dalai Lama was playing "tricks to deceive the international community", the news agency Agence France Presse reported.

Supporters suggest the retirement may, paradoxically, increase the Dalai Lama's influence on behalf of his community. China has repeatedly warned the leaders of other countries against meeting him.

"Up until now [foreign governments] have often sought to overcome the perception of dealing with him as a political leader ... there's a possibility that they may find it easier to have a formal relationship with him as an eminent religious leader," said Saunders.

But she added that the Dalai Lama would continue to be regarded by the Tibetan people as their free spokesperson: "In a sense, [he] cannot retire," she said.