Faymann, 56, who heads the government but is appointed by the president, made the surprise announcement in a brief statement in Vienna.
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Austrian Chancellor Werner Faymann resigned on Monday, his spokeswoman said, following the triumph by the far-right last month in the first round of presidential elections.
“I’m stepping down from my role as chancellor and SPO leader”, he said, acknowledging he had lost support within the party.
But the two parties have also presided over a rise in unemployment, with Austria losing its crown as the European Union member with the lowest unemployment.
The SPOe and its coalition partner since 2008, the centre-right People’s Party (OeVP), have dominated Austrian politics since World War II but their support has been sliding in recent years.
Faymann’s vulnerability became increasingly apparent two weeks ago, when the Social Democrat’s presidential candidate faltered against the Freedom Party’s contender, Norbert Hofer, who won the first round of presidential elections with more than a third of the votes.
“This government needs a powerful new start”, Faymann told reporters. The People’s Party has suffered similar losses.
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The Freedom Party has done well amid concerns over Europe’s refugee crisis and general voter dissatisfaction with the political status quo in Austria.
