His decision was brought on by the political and legal crisis brought about by the investigation into the murder of journalist Daphne Caruana Galizia, the newspaper reported.
Authorities have questioned Muscat's right-hand man Keith Schembri this week in their investigation into the murder of Caruana Galizia, who was blown up by a car bomb in 2017.
Her family demanded on Friday that Muscat resign, after Schembri was set free overnight. Schembri, who resigned this week as Muscat's chief of staff, denies wrongdoing.
Earlier on Friday, Muscat's cabinet turned down a request to pardon a businessman, Yorgen Fenech, over the murder in return for testimony that Fenech's lawyers said would implicate senior government figures including Schembri.After two years of stalled investigations, the authorities have moved rapidly in recent days in the murder case.