British newspaper company Mirror Group Plc has said that its embattled chief executive, Mr David Montgomery, had resigned in a move that analysts say could clear the way for the publisher's sale.

Mirror said Montgomery would be succeeded immediately as CEO by finance director Mr John Allwood, who has also served as director of Mirror's regional and Scottish operations.

Mr Montgomery's departure had been widely expected after the company held a board meeting early yesterday to decide his fate.

Industry sources had predicted the company's board would force Mr Montgomery to resign if he didn't quit voluntarily, with Mirror's non-executive chairman, Sir Victor Blank, widely expected to push for a "no confidence" vote.

According to one source, though, Mr Montgomery tendered his resignation, preventing any need for a vote.

"It was clear to him that he had lost the confidence of the board, so he tendered his resignation," the source said.

Mirror declined to comment on details of the departure.

Mirror's shares reversed early weakness after the news to add to Monday's sharp gains.

"Everybody's been suggesting that Montgomery's been the stumbling block, so this may clear the way," one analyst said.

Mr Montgomery's management role is widely seen as one of the main sticking points in the recent failed merger talks between Mirror and another regional newspaper group, Trinity.

The failure of those talks reflected the split between Mr Montgomery and Sir Victor, who joined Mirror about six months ago.

Last week, Mirror's board also rejected a tentative 200 pence per share, or £913 million sterling (€130 million) takeover bid by Regional Independent Media Group (RIM). However, Mirror said it was open to talks with RIM.

Mirror's shares rose sharply on Monday amid speculation that RIM might return with a higher offer or that Mr Montgomery's departure might lead Trinity to agree to re-open merger talks.

Some British newspapers have even speculated that German publisher Axel Springer might re-enter the picture.