"Mr Banny handed in the resignation of his government to the president because of its failure and negligence in the toxic waste spillage affair in Abidjan," the source told AFP.

Poisonous chemicals were dumped three weeks ago on open-air garbage sites around the commercial capital, Abidjan, a city of four million people.

They had been unloaded from the Probo Koala, a Panamanian-registered ship which docked at Abidjan on August 19 and left again on August 21, the city's port authority confirmed on Wednesday.

The waste contains hydrogen sulphide and organochloride, which are both poisonous and can cause nausea, rashes, fainting, diarrhoea and headaches, the French consulate in Abidjan said.

Government spokesman Hubert Oulaye said that tests had showed that drinking water had not been contaminated but that all precautions would be taken to protect the population, including relocating those affected.

He also added that several people had been arrested and three were still held in detention.

"The inquiries are continuing to quickly identify the whole chain of responsbility," Oulaye added.

The scandal caused angry protests in the city and triggered an emergency government meeting in the administrative capital, Yamoussoukro, early on Wednesday.

Banny was appointed in 2005 by the UN to head a transitional government intended to steer the divided country towards peace and elections after it was divided in two following a coup attempt by rebels against Gbagbo in 2002.

It comprised members loyal to Gbagbo as well as ministers from the ranks of the New Forces rebel group (FN) which had led the coup attempt and has since controlled the north of the country. Gbagbo's government holds the south.

A spokesman for the FN, Alain Lobognon, confirmed the government resignation to AFP.

The source close to Banny meanwhile added that the prime minister had suspended the director of Abidjan port and the head of customs pending an investigation into the spill.

The president gave Banny until 1600 GMT on Thursday to form a new government.

The Greek company that owns the Probo Koala, Prime Marine Management, confirmed that the ship, manned by a Russian crew, had discharged toxic waste, but it declined responsibility for the poisoning.

Iorgos Kouleris, the company's director of operations, told AFP in Greece that the company was "sorry for the situation".

But he added that the discharge was legal and an Ivorian company had been put in charge of the waste after it was discharged. He named the Ivorian company as Tommy, part of the Puma Energy group.

Kouleris added that the Probo Koala was chartered by the Netherlands-based company Trafigura. Trafigura told AFP in The Hague that the discharge was legal and that an Ivorian company had been entrusted with handling the unloaded waste.

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