The leftist Correa wants to pass a new constitution this year that would let him run for office again and increase state control over the economy, particularly in the Andean country's mining and oil industries.

The assembly's largest party said it will accept the resignation of Acosta, a former oil minister who said Monday he was quitting because Correa would not extend an end-of-July deadline for rewriting the constitution.

Galo Borja, the leader of Correa's party, told Reuters the party will "accept the resignation of the economist Alberto Acosta so that Vice President Fernando Cordero can take over."

"It was a difficult and painful decision," he said.

The divide between Correa and Acosta is important for foreign investors, particularly in the mining sector, where large projects run by Canadian companies are on hold until the government makes new rules.

Once the assembly produces a constitutional proposal, Ecuadoreans will vote on it in a September referendum. (Reporting by Enrique Andres Pretel, Writing by Brian Ellsworth)