JOIN USStrauss-Kahn proclaimed his innocence in a brief letter to the IMF executive board late Wednesday night, saying: "To all, I want to say that I deny with the greatest possible firmness all of the allegations that have been made against me."
But he said he was stepping down to "protect this institution which I have served with honour and devotion, and especially -- especially -- I want to devote all my strength, all my time and all my energy to proving my innocence."
In his letter, Strauss-Kahn said he felt compelled to resign as "I think at this time first of my wife -- whom I love more than anything -- of my children, of my family, of my friends."
"I think also of my colleagues at the Fund; together we have accomplished such great things over the last three years and more," he wrote.
Calls for Strauss-Kahn's resignation mounted in recent days with US Treasury Secretary Timothy Geithner saying he was "obviously not in a position to run the IMF."
The resignation came as his attorneys are preparing to appeal Thursday to New York's Supreme Court to release their client on bail.
He has agreed to post $1 million in cash, to be confined to home detention in Manhattan with electronic monitoring and to turn over his UN travel document to "eliminate any concern that Mr. Strauss-Kahn would or could leave this court's jurisdiction," attorney Shawn P. Naunton wrote in the appeal.
A tentative deal was in the works that could result in his release on bail as early as Thursday, CNN reported citing a source close to the defence.
The appeal adds a number of conditions, including electronic monitoring, which were not in a bail request turned down Monday by a criminal court judge in Manhattan.
The appeal to the state Supreme Court describes the accused as "a loving husband and father, and a highly regarded international diplomat, lawyer, politician, economist and professor, with no prior criminal record".
It also said Strauss-Kahn has been married for more than a decade and has four children from a prior marriage, one of whom is a graduate student at Columbia University in New York.