Paetongtarn, 39, served less than a year as prime minister before being sacked by a court in August over an ethics breach related to her handling of a border dispute with Cambodia.

The Shinawatra clan has for two decades been the key foe of Thailand's pro-military, pro-royalty elite who view their populist brand of politics as a threat to the traditional social order.

But the Shinawatra dynasty has faced a series of legal and political setbacks, including the jailing of 76-year-old Thaksin this year for corruption during his time in office.

The Pheu Thai party announced Paetongtarn's resignation in a statement on Wednesday, quoting her as saying the move would allow the party to "undergo a complete overhaul".

"My resignation will allow the party to upgrade so eventually we can win the election," she said in the statement. 

Paetongtarn added that she would remain a party member and "continue to work hard for our Thailand".

Thaksin, who founded the first iteration of Pheu Thai in the late 1990s, was ousted in a 2006 coup and then went into exile for more than a decade.

Paetongtarn was the third Shinawatra to become prime minister, following her father and aunt Yingluck Shinawatra. She is also the last family member still active in politics.

Analysts say her departure as party leader could mark the end of the family's dominance in Thai politics, though some believe the Shinawatras still hold sway over Pheu Thai.

"It doesn't matter who leads Pheu Thai, it will always be run by the family in the backroom," Yuttaporn Issarachai, a politics expert at Sukhothai Thammathirat Open University, told AFP.

He added that her resignation was mainly to safeguard against legal challenges to the party, after she was removed from office by the court.

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