The Greenlandic government called a parliament election on Wednesday after the autonomous island's Prime Minister Aleqa Hammond resigned as the chairwoman of the social democratic Siumut party.

Greenland's acting Prime Minister, Kim Kielsen, announced it at a press conference on Wednesday evening, according to Danish news agency Ritzau.

Hammond, who has become the leader of Greenland after winning the 2013 general elections, is being investigated for allegedly misusing public funds for private use.

Doris Jakobsen, who is a member of the Greenland Parliament for Siumut, said Hammond has made the right decision.

"That is good, as we now have the opportunity to elect a new chairwoman of the party. It is a shame that she has not done it a little earlier," Jakobsen was quoted by Ritzau as saying.

Siumut's executive committee has approved Aleqa Hammond's request and decided that the party's political vice president Joergen Waever Johansen will be the acting party chairman before an extraordinary general meeting, according to Greenlandic newspaper Sermitsiaq.

Hammond, who won an overwhelming victory in 2013 election, has been under fire since Friday as she was accused of spending around 106,000 Danish kroner of public funds on private airline tickets and hotel stays for family members.

Hammond has admitted the irregularities, but attributed them to "accounting errors".

Greenland's opposition party demanded that Hammond step down and proposed a censure motion against her.

Hammond narrowly escaped a vote of no confidence on Tuesday and lawmakers granted her temporary leave.

Two ministers from the Siumut party and one from the liberal Atassut party also resigned as they no longer have confidence in Hammond.

The Atassut party, without which the government lacks a parliamentary majority, said it would also leave the coalition.

Greenland, an autonomous territory of Denmark, is the biggest island in the world with around 57,000 inhabitants. Greenland is largely self-governed, and Denmark maintains control only over foreign affairs and defense policy. (1 US dollar = 5.75 Danish kroner)