The prime minister's associates expressed their grief and concern over the move, while politicians from the Right and the Left expressed their relief.
In response, Hadash chairman, MK Mohammad Barakeh, called on Attorney General Menachem Mazuz to outlaw the Yisrael Beiteinu party.
"Lieberman's remarks today are an incitement to murder. The man suffers from racial AIDS and should be cured outside politics," he said.
MK Ahmad Tibi (United Arab List-Ta'al) added, "I feel deep contempt towards Lieberman's remarks and beliefs. The international community must stop treating this terrible man with forgiveness and prevent his entry into democratic states, just like Austria was boycotted because of Joerg Haider."
MK Talab El-Sana (United Arab List-Ta'al) said, "Good riddance. In the first place there was no room in the government for a racial party which only aims at broadening the gaps and thwarting any chance for peace, a party inciting dispute and bloodshed."
Resigning faction (Photo: Gil Yohanan)
MK Chaim Oron (Meretz) said that Lieberman's resignation from the government removes an obstacle in the progress of the peace process."
Oron noted, however, that "this does not guarantee that the government will implement the evacuation of the outposts, will freeze settlements and will hold serious negotiations. Lieberman quit because of words, while the government will be examined through its deeds."
Meretz Chairman Yossi Beilin said, "Lieberman's harsh remarks on the diplomatic issue and on Israel's Arabs are proof that those who thought that a diplomatic process could be led with such a party in the coalition made a grave mistake.
"I hope the fact that Lieberman released the government from Yisrael Beiteinu's presence will allow the government to make real progress in the diplomatic process and move from words to deeds."
Will Shas and Barak follow?
MK Silvan Shalom (Likud) found it difficult to hide his satisfaction. "This is the beginning of the end of the Olmert government, and even jugglers won't be able to prevent the obvious. I hope (Defense Minister Ehud) Barak follows in Lieberman's footsteps instead of favoring the government's survival over the remains of his reliability.
"Shas should also leave the government. What's better, serving in a cemetery?"
His fellow faction members, MK Yisrael Katz, congratulated Lieberman and called on him to "join the diplomatic struggle against the government and work with the Likud to move up the elections and replace the government."
Sources at the reserve soldiers' campaign against the government also expressed their satisfaction over Lieberman's move. "Time is running out on Olmert. There is no doubt that the recent developments reflect the growing lack of trust towards the prime minister among the general public, but that is not enough.
"The eyes of the reserve soldiers, the bereaved families and the entire people are now raised toward Ehud Barak. He holds the key for the survival of a failed leader, a leader who is losing the little trust still left in him."
MK Yoel Hasson (Kadima) believes that Yisrael Beitienu's move was unnecessary. "Lieberman missed out on an opportunity to influence the diplomatic processes."
According to Hasson, "The prime minister must prefer to include United Torah Judaism in the coalition over Meretz. Meretz's presence in the long run will lead to Shas' resignation and will cause the government to lean to the left. The Kadima faction must object to the inclusion of Meretz in the government."
Shas officials reiterated Wednesday that the faction would also leave the government the moment the status of Jerusalem becomes part of the negotiations with the Palestinians. Minister Eli Yishai is expected to meet with Prime Minister Olmert in the coming days in order to receive clarifications on the issue.
Sharon Roffe-Ofir, Amnon Meranda, Attila Somfalvi, Aviram Zino and Neta Sela contributed to this report