The man nominated to be South Korea's next prime minister announced his withdrawal on Sunday amid a mounting scandal over alleged misconduct while he was a provincial governor.
Two others nominated for ministerial posts also offered their resignations, in a political blow to conservative, Mr President Lee Myung-Bak.
Kim Tae-Ho, 47, was put forward for prime minister three weeks ago as part of a major cabinet reshuffle by Lee, who is midway through his five-year term. His appointment had to be approved by parliament.
"I am giving up the designation in order not to do more damage to the president's political operations," Kim told a press conference.
"Even if I become prime minister, how could I do anything if I do not have people's trust?"
Kim came under fire during a parliamentary confirmation hearing last week over charges that he under-reported income, illegally took bank loans for election campaigns and made local government employees do his household chores while he was governor of South Gyeongsang province in the southeast.
Lawmakers also criticised Kim's wife for allegedly using provincial government employees and public vehicles for private purposes.
Kim was also accused of lying about links to a businessman jailed for offering bribes to politicians.
The ruling and opposition parties had agreed Friday to postpone a vote on Kim's confirmation, scheduled to take place on the same day, until September 1 amid questions over his suitability.