LIBREVILLE (AFP) - After months of rivalry, President Fradique de Menezes of Sao Tome and Principe has dismissed Prime Minister Maria das Neves and her government, a source close to the president`s office told AFP.

Das Neves`s name has been "raised in an economic and financial scandal... This is the main reason" for her dismissal, the source in the small west African island state told AFP in Libreville by telephone, without giving details.

De Menezes has asked the prime minister`s party, which won the last parliamentary elections, to present a new prime minister, the source added Wednesday.

Das Neves, who is on the other side of the political spectrum to the head of state, became prime minister in October 2002 and returned to office at the head of a reshuffled coalition government after a military coup bid which began and ended peacefully in July 2003.

She is a member of the Movement for the Liberation of Sao Tome and Principe (MLSTP), which was until a 1990 constitutional referendum the sole ruling party in the former Portuguese colony.

The prime minister has for months been engaged in a power struggle with De Menezes over the management of the island nation of scarcely 140,000 people, which is deeply in debt but has been found to be sitting on oil reserves worth developing.

Until March, the government included members of all three main political parties in the archipelago, but the four MDFM ministers handed in their resignations that month. They were accepted by the president.

Since then, Das Neves has been head of a government with no ministers from the presidential party. She had asked for the resignation of two of the MDFM ministers on the grounds that they were taking decisions without consulting her. The others followed suit in solidarity with their colleagues.

In August last year, Das Neves handed in her resignation in the wake of the coup bid, in which a self-proclaimed "national salvation" junta took ministers hostage on July 16 while the president was on a trip to Nigeria.

The putschists denounced poverty and corruption and said they would set up transitional authorities, but backed down a week later under strong pressure from Portugal, other former Portuguese colonies and the United States, which oversaw negotiations.

The negotiations led to a government reshuffle and a memorandum of understanding on development and army pay, as well as an amnesty for the soldiers.

After that, the government was riddled with dissent between the MLSTP, which has only a tiny parliamentary majority of 24 of 55 seats, and De Menezes`s Democratic Movement of Forces for Change (MDFM), which has 23 seats in the national assembly.

The president in December last 2001 dissolved parliament in the hope of getting rid of an absolute majority held by the MLSTP, but his own party failed to win as many seats as he had wanted.