Iceland's Social Democrat Foreign Minister Ingibjorg Gisladottir, head of the junior party in the coalition, said on Monday she would not seek to become prime minister after Geir Haarde, who has said he will resign.

"I have suggested Social Affairs Minister Johanna Sigurdardottir as prime minister material for a new government coalition and I will personally step aside and take a leave of absence for one or two months," she told reporters at parliament.

Haarde's government, a coalition between his Independence Party and Gisladottir's Social Democratic Alliance, has been under pressure since the global financial crisis hit Iceland in October.