Papua New Guinea Prime Minister Peter O'Neill has resigned after seven years on the job.

His announcement follows weeks of high profile defections from his government to the opposition.

O'Neill said in a news conference in the capital of Port Moresby that recent movements in parliament have shown a "need for change."

He handed over his leadership to a former prime minister and current member of parliament, Sir Julius Chan.

On Friday, one of O Neill's key coalition allies abandoned him. The opposition bloc has since been saying it has 62 lawmakers in its camp, which would give it a majority in parliament.

The resignation will be formalized when O'Neill visits the governor-general, the official representative of Queen Elizabeth II.