Ali Zeidan has been dismissed as prime minister of Libya by the General National Congress (GNC).
He had previously survived two no confidence votes in the past six months,
Defence Minister Abdullah al-Thinni has now been appointed as acting prime minister for the next two weeks while the GNC seeks a full time replacement, the local Libya Herald reports.
The 200-member GNC will hand over a new law to the Higher National Elections Commission by the middle of April to start the process of new parliamentary elections by July.
The GNC members called for the vote after a tanker broke a naval blockade of the El-Sidra port, laden with more than 200,000 barrels of crude oil. The North Korean vessel, named Morning Glory became the first to load oil from a rebel held oil terminal since armed groups began seizing Libyas oil export infrastructure.
Libyas oil sector, which accounts for 70 per cent of GDP and 95 per cent of state revenue, has been crippled by intermittent strikes and blockades at production and export facilities since June 2013. Having recovered to 1.4 million barrels a day (b/d) from almost zero in 2011, production fell dramatically to as low 250,000 b/d at the end of 2013.
The rebel Cyrenaica Transitional Council, led by Ibrahim Jathran, a former Petroleum Facilities Guard (PFG) member controls as much as 600,000 b/d of Libyas export capacity, about half the countrys total.
The rebel group made a number of attempts to sell crude through the Libya Oil & Gas Corporation, a new entity established to bypass the state-owned National Oil Corporation (NOC). The attempts to attract buyers failed, as the Libyan Navy fired warning shots at ships that looked like they might try loading.
However, according to local media reports, the navy was unable to pursue the ship due to bad weather. Special forces operations against the rebel held oil terminals are due to begin next week.