But the day was not over. In the evening it emerged that prime minister Gunnlaugsson's office had sent out a press release to the foreign media claiming he had not in fact resigned at all and was still in power and would remain as head of his party and as an MP. The office of the prime minister, it said, would only be temporarily handed over to party deputy Jóhannsson. This sparked great confusion and speculation that has yet to abate as of this writing, on Wednesday morning.

UPDATE:

The strange press release not withstanding, it has now been made clear that Sigmundur Davíð Gunnlaugsson will step down as PM. Apparently the press release was written by an aide. The two coalition parties are now in talks about how to form a new government with a new prime minister.