In a shock move, South Australian Premier Mike Rann has ended 48 hours of speculation on a leadership coup by announcing he will step down as the state Labor Party leader.

Mr Rann has agreed to step aside in favour of Education Minister Jay Weatherill, a former lawyer, who has held the Adelaide seat of Cheltenham since 2002.

The premier, who is in India on a seven-day trade mission, says he has told his colleagues he will hand over the leadership, but only after a smooth mentoring transition period.

"I have always believed it is for the parliamentary party to choose the leader," Mr Rann said in a statement on Sunday.

"A decision has now been made that Jay Weatherill is the person who will succeed me ... I have decided that a seamless transition to a new leader was the most appropriate course in the interests of South Australia."