NEW YORK Dominique Strauss-Kahn, claiming he is innocent of sex charges, said he has resigned as the International Monetary Fund's (IMF) head with infinite sadness. His resignation is likely to set off a succession battle to lead the global lender pitting the developing world against the West. Strauss-Kahn resigned Wednesday as managing director of the IMF after he was accused of sexually assaulting a housekeeper in his luxury suite at a New York hotel. "It is with infinite sadness that I feel compelled today to present to the executive board my resignation from my post of managing director of the IMF," he said in a statement released early Thursday by the organisation. "I think at this time first of my wife whom I love more than anything of my children, of my family, of my friends." The resignation comes four days after Strauss-Kahn, 62, was removed from an Air France plane at John F Kennedy International Airport and arrested. Strauss-Kahn is accused of sexually assaulting a Sofitel hotel maid after he came out of his suite's bathroom naked on Saturday. His attorney, Benjamin Brafman, has suggested any encounter was consensual. The maid's attorney, Jeffrey Shapiro denied that Brafman's suggestion. "There was nothing that took place in that hotel room which in any way could be construed as consensual. This woman was absolutely the victim of a physical and sexual assault," said Shapiro. Strauss-Kahn, a former French finance minister, had been expected to declare his candidacy on the Socialist Party ticket for the French presidency and was considered one of the candidates most likely to defeat President Nicolas Sarkozy. The IMF Sunday appointed John Lipsky, a US banker, to manage the organisation until a new managing director is appointed. In his resignation statement, Strauss-Kahn said, "I want to say that I deny with the greatest possible firmness all of the allegations that have been made against me." Strauss-Kahn was on suicide watch in the protective custody wing of Rikers Island after being denied bail. In papers filed Wednesday in New York Supreme Court, Strauss-Kahn offered to submit to electronic monitoring and house arrest, and to post $1 million cash bail. A hearing was scheduled for Thursday. The resignation of Strauss-Kahn promises to set off a succession battle among the developing world against and the West. The leading contender appears to be French finance minister Christine Lagarde, but emerging economic powers could press for an end to the long-standing Western dominance of the institution, with Turkish former UN official Kemal Dervis also said to be near the top of the list. Five days after Strauss-Kahn was arrested, the Fund, a crucial player in protecting global economic stability, has given no suggestion of what it will do. But several candidates have been mentioned and a fight looms over whether the next chief will come, as tradition has dictated, from Europe, or from one of the rapidly developing economies flexing their muscles on the world stage. The IMF itself has said little about the crisis and continued its work under acting director John Lipsky, signing off this week on a 78-billion-euro ($111 billion) Portugal bailout, releasing funds for Ireland's bailout, and putting pressure on Pakistan to improve its fiscal management. "The Fund will communicate in the near future on the executive board's process of selecting a new managing director. Meanwhile, John Lipsky remains acting managing director," the IMF said in a short statement accompanying Strauss-Kahn's resignation letter. Officially, the 24-member executive board votes to fill the top post, with votes weighted based on member countries' and regions' subscription quotas. But traditionally it has been negotiated based on a pact that gives the United States a hold on the World Bank's top job and Europe the IMF position. Some European leaders have already called for another European to be named, with Lagarde and former German central banker Axel Weber mentioned as possible candidates. In recent years, however, shifts that have given rising economies greater quotas, and dissatisfaction with the IMF's approach to many crisis-struck countries, have sparked pressure for a broader-based pool of candidates. The popular shortlist from emerging economies includes Dervis, Indian planner and IMF veteran Montek Singh Ahluwalia, and Mexican central banker Agustin Carstens. "South Africa calls for a candidate from a developing country to be given the opportunity to be the managing director of the IMF," the country's finance minister Pravin Gordhan said Wednesday. "The era is over in which it may have been even remotely appropriate to reserve that important post for a European national," Brazilian Finance Minister Guido Mantega said in a letter to G20 colleagues. Mexico echoed those calls late Wednesday, saying the selection "should be made through an open, transparent process based on the merits of the candidates and not favour the criterion of nationality." If it comes down to a board vote, the quota system favours the old economic powers: the United States has 16.80 percent of the vote; Japan 6.25 percent; Germany 5.83 percent; and Britain and France each have 4.3 percent. As blocs, the G7 major economies hold 44.3 percent of voting rights, while emerging market and developing countries have 40.5 percent, based on March 2 IMF figures. But negotiations will play a major part, concluded Mohammed El-Erian, the chief executive of investment giant Pimco, who has also been mentioned as a candidate for the post. "Judging from the dynamics already in play, (the selection) will again be undermined by an outmoded and harmful process, that places national prestige above the multilateralism that the IMF stands for," he said in a recent article. "This feudal selection approach must be changed; and now is the time to do it," he maintained.