Attorney General Menachem Mazuz has decided to close a criminal investigation into Chief Ashkenazi Rabbi Yona Metzger but will ask him to resign from his position.

Mazuz will not seek an indictment against Metzger for fraud and breach of trust related to a stay in a Jerusalem hotel, it was announced on Monday.

Nevertheless, due to findings that emerged during the criminal probe into the affair, Mazuz called on Metzger - who lied to investigators - to resign from his position as chief rabbi.

Mazuz even warned that, in the event Metzger refuses to resign, he would take administrative action via the committee for the appointment of rabbinical judges seeking his dismissal.

Metzger is set to file on Tuesday a petition with the High Court of Justice petition against Mazuz's call for his resignation.

"A legal ruling was issued without giving me the opportunity to defend myself. This was a violation of the basic rights enjoyed by every individual," Metzger said.

Metzger was being probed for allegedly staying with his family at the David Citadel Hotel in Jerusalem for a minimal fee during Pesach 2004.

During an investigation into the affair, police discovered that the Metzgers also allegedly received huge discounts at the David Citadel during 2004's Sukkot and Shavuot holidays, and enjoyed similarly discounted stays at other hotels.

"Given his flawed conduct, it is only right for Rabbi Metzger to take personal responsibility and decide - on his own accord - to step from his position as rabbinical judge and chief rabbi," Mazuz said. "The continuation of his tenure is liable to seriously hamper the public standing of the chief rabbinate and the main rabbinical court."

Religious Action Center: If Metzger doesn't resign, we will appeal

The Israel Religious Action Center - the legal arm of the Israel Movement for Progressive Judaism - announced that it would appeal to the courts in the event Metzger refuses to resign.

The center's Rabbi Gilad Kariv said that Metzger's conduct is "further testament to the depth of the corruption with which the Israeli religious establishment is tainted. The Orthodox public must induce that the separation of the religious establishment from the temptations of power is the only measure that will restore the public's faith in the chief rabbinate and bring it closer to Jewish heritage."

The Movement for Quality Government in Israel notified Metzger in writing that if Mazuz' accusations are founded, he must resign.

The "Ometz" movement - an organization of citizens working to cleanse public administration from corruption - informed Metzger's attorneys they demand the chief Ashkenazi rabbi continue to refrain from participating in the meetings of the committee for the appointment of rabbinical judges. The movement added that if Metzger fails to comply with this demand they will petition the High Court of Justice.

MK Yitzhak Levy (National Union-National Religious Party) called upon Metzger to resign following Mazuz' decision: "Metzger must resign in order to maintain the integrity of the chief rabbinate. The rabbinate ought to symbolize to the Jewish people the Jewish values of ethics and public integrity, and it mustn't be tainted by suspicion of corruption."

MK Ophir Pines-Paz of the Labor Party called upon Metzger to uphold the integrity of the institution of the chief rabbinate and resign.