Bangladesh's president dissolved parliament on Tuesday, clearing the way for an interim government and new elections a day after Prime Minister Sheikh Hasina resigned and fled following a violent crackdown on a student-led uprising.

President Mohammed Shahabuddin's office also announced that the leader of the opposition Bangladesh Nationalist Party, Begum Khaleda Zia, a former prime minister who had feuded with Hasina for decades, had been freed from house arrest.

Student protesters had threatened more demonstrations if parliament was not dissolved.

The movement that toppled Hasina rose out of demonstrations against public sector job quotas for families of veterans of Bangladesh's 1971 independence war, seen by critics as a means to reserve jobs for allies of the ruling 
party.

About 300 people were killed and thousands injured in violence that ripped through the country since July.

After demonstrators stormed and looted the prime minister's lavish residence on Monday, the streets of the capital Dhaka were again peaceful on Tuesday, with traffic lighter than usual and many schools and businesses that 
shut during the unrest still closed.

Students who led the protests were seen directing traffic at major intersections in Dhaka in the absence of police.

"We haven't seen any traffic policemen since yesterday evening. That's why we took the responsibility to control traffic so that everyone can commute smoothly," Mohammad Nur, a 20-year-old college student, told Reuters TV.

Garment factories, which supply apparel to some of world's top brands and are a mainstay of the economy, remained shuttered with plans to reopen to be announced later, the main garment manufacturers association said.

The decision to dissolve parliament was taken following meetings with the heads of armed forces, leaders of political parties, student leaders and some civil society representatives, the presidential statement said.

Hasina's flight ended her 15-year second stint in power in the country of 170 million people, which she had ruled for 20 of the last 30 years at the helm of a political movement inherited from her father, state founder Mujibur Rahman, after he was assassinated in 1975.

Since the early 1990s Hasina had feuded and alternated power with her rival Zia, who inherited her own political movement from her husband Ziaur Rahman, a ruler himself assassinated in 1981.