UPDATE 6-Alaska Governor Sarah Palin to resign in surprise move

(For factbox on Republicans seen as potential candidates for their party's nomination in 2012, click on [ID:nN03184162]

* Palin says to work 'outside government' for change

* Gives no indication of future plans

* Analysts speculate on possible bid for presidency

* Lieutenant Governor Sean Parnell takes over July 26 (Adds quote from former Alaska governor Knowles)

By Yereth Rosen

ANCHORAGE, Alaska, July 3 (Reuters) - Alaska Governor Sarah Palin, the Republican Party's vice presidential candidate in 2008, said on Friday she will resign this month, an unexpected move that could signal a run for higher office.

Palin took no questions after a brief news conference in her hometown of Wasilla, Alaska, members of her state Cabinet by her side. She gave no indication of her future plans.

"I'm not seeking re-election" in 2010, Palin said, adding she would transfer authority to Lieutenant Governor Sean Parnell on July 26.

Palin, Arizona Sen. John McCain's surprise pick as his running-mate in the 2008 presidential race, rallied the party's conservative base but alienated others who believed she did not have the experience to be vice president.

She has been mentioned as one of the top three Republicans who could vie for the party's presidential nomination in 2012. Those mentioned most often include Mississippi Governor Haley Barbour and former Massachusetts Governor Mitt Romney.

"We are not retreating, we are advancing in a different direction," Palin said. "We know we can effect positive change outside government at this moment in time."

Palin, 45, said her decision came after much "prayer and consideration." She said she did not want to waste time on "political blood sport" and cited public criticism of her actions and her family since the 2008 campaign.

"You are naive if you don't see a full-court press right now on the national level picking apart a good point guard," Palin said, using a basketball analogy.

"She closed a chapter in Alaska politics on a very weird and bizarre note," said former Alaska Governor Tony Knowles, a Democrat who served two terms, in a telephone interview.

"Friends or foes alike would have never thought that she would be a quitter, but that's what she did today."