Malaysia’s prime minister announced Thursday he will retire early and hand over power to his deputy by mid-2010, easing the political uncertainty gripping the country since March general elections.

The announcement by Prime Minister Abdullah Ahmad Badawi is likely to reduce pressure on him from dissidents in the ruling United Malays National Organization party who have been clamoring for his resignation. It will also put to rest questions of an unexpected and early challenge for the top post by Deputy Prime Minister Najib Razak.

“I made the decision in the belief that Najib will be a good successor and will lead the party well,” Abdullah told reporters after a meeting of UMNO’s decision-making Supreme Council and a subsequent closed-door speech to party division leaders.

Abdullah said the party endorsed his decision with a standing ovation.

He evidently hopes that the decision will help the party unite at a time it is facing serious challenge from opposition leader Anwar Ibrahim, who is threatening to bring down the government with parliamentary defections by mid-September.

The ruling National Front coalition, dominated by UMNO, has a slim 30-seat majority in the 222-member Parliament, the result of its massive setback in the March 8 general elections.

Soon after the elections, Abdullah said he would hand over power to Najib but did not set down a clear timetable, angering dissidents who suspected that he wanted to serve out his entire second term, which expires in 2013.

Abdullah said he would hand over the post of party president to Najib “by the middle of 2010.” Traditionally, the party president becomes prime minister.

“I won’t lead the party and the National Front in the next general elections,” he said, adding that he felt a bit sad as well as a “sense of achievement.”

“Najib also needs time to prepare himself for the next general election in 2013 or 2012,” he said.

A two-year grooming period is expected to give Najib enough time to consolidate his position in the party at a time when he is locked in an outlandish battle with Anwar over alleged sexual misconduct.

Anwar has been accused of sodomizing a male aide, a charge he has dismissed as a political conspiracy by Najib.

A few days after the aide made the accusation, a private detective came forward to claim he was told that Najib had a sexual affair with a Mongolian woman who was later killed and her body blown up with explosives. Less than 24 hours later the detective retracted his statement and vanished with his family.

Anwar’s camp says the detective was forced to retract the statement and may be in danger now.

Najib has denied knowing the Mongolian woman. Two policemen are being tried on charges of murdering her, and a close friend of Najib is on trial for allegedly abetting her murder.

Najib pledged to give Abdullah his full support.

“Today is the start of the process of an organized leadership transition. I’m touched by (Abdullah’s) willingness to let go of his position. It is not an easy thing to do. But he is willing to do so to respect public wishes,” he said.