The decision, confirmed to Reuters by five AK Party officials, came after a meeting of more than 1-1/2 hours between Davutoglu and President Tayyip Erdogan that followed weeks of increasingly public tension between the two men.
The ruling Justice and Development Party (AK Party) sources told Hurriyet Daily News that Davutoglu would not run for a seat at the congress.
Still, the congress will not be a smooth one since the PM has a clout over some 120 deputies, sources told the Daily News, asking to remain anonymous.
Broadcaster CNN Turk quoted sources as saying that the congress will be held this month.
The relations were reportedly tense between the two statesmen amid fresh rumors suggesting that Davutoglu may be planning to resign after saying on May 3 that he would not hesitate to “walk away from any job position,” Hurriyet Daily News reported.
Erdogan wants an executive presidency in Turkey to replace the current parliamentary system, a plan for which Davutoglu has offered only lukewarm support. His departure is likely to pave the way for a successor more willing to back Erdogan’s ambition of changing the constitution and strengthening the presidency, a move opponents say will herald growing authoritarianism.
"The president and prime minister reached agreement on the congress ... I don’t think Davutoglu will be a candidate again," one of the officials told Reuters.
"Davutoglu’s likely early exit as party leader and PM constitutes another episode that show that Erdogan’s dominance over the AKP and the executive is absolute and unchallenged," said Wolfango Piccoli, head of research at Teneo Intelligence.
"In the short term policy paralysis will prevail and then, once a new party leader is elected, a more incisive effort to amend the constitution could ensue," he told Reuters.
The AK Party official said the congress would be held as soon as May 21 and no later than June 6, the first day of the Islamic holy month of Ramadan, and that Erdogan was adamant there should be no vacuum of power at the head of government.
RIFT
Erdogan’s drive to tighten his grip on power has caused an increasingly open rift with Davutoglu, encompassing issues from relations with Europe to the pre-trial detention of government critics.
Erdogan wants a robust presidential system as a guarantee against the fractious coalition politics that hampered Turkey in the 1990s. His opponents see a stronger presidency as a vehicle for his own ambition.
Such a system would have seen Davutoglu sidelined.
The two have governed in a strained alliance since Erdogan won the presidency in 2014 and Davutoglu replaced him as prime minister. Aides to Davutoglu had largely dismissed the tensions as matters of style rather than substance.
But in the clearest sign yet of a power struggle, the authority to appoint provincial AK Party officials was taken from Davutoglu last week. The move reduced Davutoglu’s hold over the party grassroots and cemented Erdogan’s influence.
The two leaders have appeared at odds over the deal with the EU to stem the flow of illegal refugees from Turkish shores to the Greek islands, in return for which Ankara has been promised accelerated EU accession talks, visa liberalization and financial aid. The deal has been Davutoglu’s project, and its future may be less certain after his departure since Erdogan is a frequent critique of the EU.
Former diplomat and political commentator Sinan Ulgen said the two leaders had always faced a "fundamental dilemma."
"Erdogan’s end goal is to consolidate enough popular support to switch to a presidential system. Davutoglu’s end goal is to consolidate his own power and be a successful prime minister," said Ulgen, head of the EDAM think-tank in Istanbul.
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