Nikos Kotzias tendered his resignation after the heated exchange with Defence Minister Panos Kammenos on Tuesday, according to Greek media reports.
Yesterday’s “explosive” clash began during a debate over a decades-long name dispute with neighbouring Macedonia.
But tensions quickly flared when Mr Kammenos accused Mr Kotzias of mismanaging secret foreign ministry funds, according to Greek newspaper Kathimerini.
The Defence Minister reportedly went on to brand his cabinet colleague a puppet of US billionaire financier George Soros.
A witness privy to the meeting told Reuters: “They are both explosive characters.”
Greek Prime Minister Alexis Tsipras today announced he will take over the duties of the outgoing Foreign Minister.
He pledged to ensure an agreement reached in June to rename the neighbouring country ‘Republic of North Macedonia’ is implemented.
But the sudden resignation demonstrated Greece’s leader is willing to sacrifice one of his closest political allies to save his fragile coalition government, comprised of the left-wing Syriza party and Mr Kammenos’s Independent Greeks.
Mr Tsipras relies on support from the right-wing Independent Greeks to maintain his slim majority in parliament.
But Mr Kotzias’s shock exit highlights the deep divide in Greece’s cabinet over the contentious Macedonia issue and comes as the two countries are on the verge of sealing a deal which would bring the 27-year dispute to an end.
Mr Kotzias was a fierce advocate of the agreement and had been spearheading negotiations with the northern neighbour over changing its name, which it chose following the break-up of the former Yugoslavia.
Greece fears the name ‘Macedonia’ could imply a territorial claim to a northern Greek region which is also called Macedonia.
After nearly 30 years of talks, which have sparked a series of bitter protests on both sides of the border, an agreement was finally reached in June which would see the Former Yugoslav Republic formally renamed.
Mr Tsipras’ Syriza party is trailing badly ahead of national elections due next year and the Greek leader hopes a resolution to the decades-old dispute with Macedonia will boost his political standing.
But Defence Minister Mr Kammenos is a staunch opponent of the accord and has threatened to quit if the Greek government pushes ahead.
Despite today’s pledge by Prime Minister Tsipras, both the Greek and Macedonian parliaments still need to sign off on the deal.
And last month, a referendum on the accord saw just 37 percent of the in Macedonian electorate turn out to vote – too few for the result to be valid.