The announcement is a step toward his much-anticipated resignation and toward ending two months of bloody warfare in Monrovia that has killed at least 1,000 people.
In a letter to Congress, Taylor said he would hand power to his vice president, Moses Blah. Lawmakers approved the decision, paving the way for Taylor's stepping down Monday, as promised.
Earlier Thursday, more than 100 Nigerian troops blew kisses and waved handkerchiefs as they traveled 30 miles from their airport base into Monrovia in white armored personnel carriers, trucks and sports utility vehicles.
It was not clear when the Nigerian peacekeepers would begin patrolling the streets of Monrovia, but, as CBS News reports, their very presence has brought new hope to a land broken by 14 years of war.
Thousands of Liberians crammed the shoulders of the roads along the way, chanting, "We want peace, no more war."
"I'm going with them," said Prince Phillip, one young man running alongside the convoy. "We need to eat, we're tired of this war."
"There is going to be a big change, it is going to be a great thing for Liberia and I see (it as) prosperity and a blessing on Liberia," onlooker Mayvne Pyne told CBS News.
The city's desperate people have been clamoring for rescue by peacekeepers, meant to come between the warring parties and open up humanitarian corridors from the rebel-held port, allowing food and aid to flow into Monrovia.
Peacekeepers also are to oversee Taylor's departure from the country. Beset by rebels fighting to oust him and indicted for war crimes, Taylor faces mounting international pressure to leave the country. He has accepted an offer of asylum in Nigeria, but has set no date for leaving.
Taylor has pledged repeatedly to resign only to hedge or renege on his promises. But he moved toward making good on his vow to resign Monday in his letter to Congress. Blah, along with House Speaker Nyundueh Monkomana, had been a top candidate to replace him.
In the letter, Taylor said his government had been the victim of an "international conspiracy," including support by neighboring countries for rebel factions and U.N.-imposed arms and diamond embargoes.
"This orchestration has prevented me from carrying out my constitutional responsibilities of defending the country and providing essential social services for the people," he said in the letter, which was read to reporters.
"Therefore I as president of this noble republic can no longer preside over the suffering and humiliation of the Liberian public."
Representatives and Senators, meeting behind closed doors, endorsed the decision — a necessary step under Liberia's constitution before Taylor relinquishes power, the house speaker said.
Blah was a feared general in Taylor's faction during Liberia's last 1989-96 civil war. Blah, 56, trained with Taylor in Libya for three years during the late 1980s and was among the first 200 forces who crossed from neighboring Ivory Coast to launch the uprising against then-President Samuel Doe.
Last month, Blah was arrested for 10 days on charges of conspiring with Americans to overthrow Taylor. But he puts the incident down to a misunderstanding.
Taylor, a Libyan-trained ex-guerrilla fighter blamed for much of the bloody strife that has embroiled Liberia for almost 14 years, has been reduced to a last redoubt in central Monrovia as rebels press their siege of the city.
Fighting in the past two months has split Monrovia into rebel and government sides, killed well over 1,000 civilians outright and left hunger and epidemics raging among the 1.3 million residents and refugees.
The Nigerians who entered the capital are the vanguard of a West African force envisioned in an oft-violated June 17 cease-fire agreement signed between Taylor's government and rebels battling since 1999 to oust him. The force has been repeatedly delayed.
West African leaders have promised an eventual 3,250-strong peace force in Liberia. Nearly 500 Nigerian soldiers with five armored vehicles have arrived at the airport outside Monrovia.
The United States is under pressure to take the lead on helping to restore peace in Liberia — a nation founded by freed American slaves in the 19th century — but Washington insists that American involvement will be limited.
On Wednesday, helicopters brought the first seven U.S. Marines to support the steadily building West African peace force in Monrovia.
The Marines flew from a three-ship U.S. Navy group carrying 2,000 Marines and 2,500 sailors off Liberia to coordinate U.S. logistical support for the West African soldiers.
No Marines could be seen among the West African peacekeepers making their initial foray into the capital.
President Bush has said no larger American force will go ashore until Taylor leaves the country. "We would like Taylor out," Bush said Wednesday in Crawford, Texas.
Taylor has hedged on when he would take up an offer of asylum in Nigeria — setting new conditions for his departure in recent days. His government has said he would leave only after enough foreign peacekeepers are on the ground and if a war crimes indictment against him is dropped.
Nigerian officials told The Associated Press that the Liberian leader had indicated he hoped to leave around Aug. 16 or 17. But South African President Thabo Mbeki said Taylor assured him he would leave within 24 hours of handing over power Monday.
Nigerian officials, speaking on condition of anonymity, said they and others were trying to speed Taylor's exit. Nigeria said in a statement from President Olusegun Obasanjo's office that it was "finalizing arrangements" for Taylor's departure.
Jacques Paul Klein, the top U.N. envoy for Liberia, urged Taylor to leave before he is arrested. A U.N.-backed court has indicted Taylor on war crimes charges for allegedly supporting rebels during a brutal decade-long war in neighboring Sierra Leone.
"The warrant never goes away, and the court will be there for a number of years," he advised Taylor. "So go while the getting is good."