Luxembourg's parliament yesterday (10 July) reviewed a report it commissioned on the security agency's illegal bugging of politicians, purchase of cars for private use and allegations it took payments and favours in exchange for access to local officials.
"There was no other choice than to hand in the government's resignation," said Juncker.
The report concluded that Juncker had limited control over the agency despite being the responsible minister and that he failed to inform either the parliamentary committee of control or justice authorities about its operations.
"We invite the prime minister to take full political responsibility in this context and ask the government to intervene with the head of state to clear the path for new elections," Alex Bodry, the president of the Socialist coalition partner, told the Luxembourg parliament.
Juncker, who became prime minister in 1995 and is the European Union's longest serving head of government, denied having done anything wrong.
"If you think that you will have to vote," an angry Juncker said earlier on Wednesday after citing a newspaper article that accused him of abusing the secret service for his personal gains and those of his party.
The Christian Democrat CSV party, which Juncker chaired before becoming Prime Minister in 1995, is in the lead to win the next election, according to opinion polls cited in the Luxembourg press.
But it was not immediately clear whether Juncker would participate in the new elections, which have to take place within three months. Luxembourg media cited other candidates as CSV front-runners for the election, including Viviane Reding, currently Justice Commissioner at the European Commission and Luc Frieden, the minister of finance.
Wealthy Luxembourg, a major financial hub, is one of Europe's most politically stable countries. The CSV has led all but one government since World War Two.