Colombo, Apr 3 (IANS): Mahinda Rajapaksa had not resigned as the Prime Minister, the Sri Lanka Prime Minister's Office clarified on Sunday evening, media reports said.

Sources, however, said that a new cabinet will be sworn in, with opposition members in it, the Daily Mirror reported.

This follows a proposal by several parties, that a new interim government must be appointed to ensure political stability.

Earlier, reports said Prime Minister Rajapaksa is likely to step down from his position in the coming hours after both he and President Gotabaya Rajapaksa have agreed to form an all party interim government, the Daily Mirror reported.

Following a meeting with the 11 party alliance members, a proposal had been submitted by the members that an all party interim government should be formed immediately with a new Prime Minister to ensure political stability in the country.

Both the Rajapaksas had given a favourable response with sources stating that Mahinda Rajapaksa had agreed to step down for a new SLPP MP to be appointed to the Premiership to ensure immediate political stability.

Sources said that the name of Dinesh Gunwawardena had been proposed as the new Prime Minister but this was yet to be confirmed.

From the main opposition SJB's side, the name of Harsha De Silva has been proposed as the new Finance Minister to replace Basil Rajapaksa.