A GJM activist, who tried to self-immolate in support of Gorkhaland, is now battling for his life.
GJM chief Bimal Gurung has also resigned as chief executive of Gorkhaland Territorial Administration - an autonomous and elected hill development council which the party has been running for a year.
The ruling Trinamool Congress made light of the developments and said it was prepared to tackle any problem. It ruled out any talks with the GJM.
GJM general secretary Roshan Giri said Gurung Tuesday faxed his resignation to Governor M.K. Narayanan.
"Gurung has resigned because of interference in the GTA by the Bengal government as well as for the demand of Gorkhaland," said Giri.
Mangal Singh Rajput, a worker of Gorkha Janmukti Yuva Morcha (GJM's youth wing), set himself on fire in Kalimpong town while the party activists were raising slogans for the proposed state of Gorkhaland to be carved out of parts of Darjeeling and Jalpaiguri districts.
The 24-year-old has been admitted to a nursing home with 60 percent burns.
With the hills already paralysed following a 72-hour shutdown called by his party since Monday, Giri said an indefinite shutdown will be organised from Saturday to raise the pitch for Gorkhaland.
"We will go for indefinite shutdowns and our movement will not stop until our demand for Gorkhaland is met," he said.
"Once the present 72-hour shutdown ends on Wednesday, we will give a two-day respite to the people to stock provisions and the tourists and the students to leave for the plains. The indefinite shutdown will begin Saturday."
"We have called an emergency meeting of the party central committee tomorrow (Wednesday) where we will chalk out our strategy. The other GTA members will also resign soon," he said.
"The UPA has allowed the formation of Telengana. Now we are left with no choice but to intensify our movement for Gorkhaland. Our demand for a separate state is far more older than Telangana," Giri claimed.
He said the GJM had signed the GTA to usher in development. "But we had never dropped the demand of Gorkhaland. Now we have nothing to ask from the state government."
The state government said it was keeping a tab on the developments.
Refusing to term Gurung's resignation as a "big setback", North Bengal Development Minister Gautam Deb said: "We are prepared to tackle the problems. We want both the hills and plains to coexist peacefully."
Describing the granting of statehood to Telengana as an "unfortunate decision of the Congress aimed at vote bank politics", Deb said it has now spurred the GJM to intensifying its movement, but ruled out any immediate talks with the hill's most prominent party.
The opposition Communist Party of India-Marxist (CPI-M) expressed concern over the situation in Darjeeling.
"We don't endorse creation of any new state because it would trigger numerous demand s for separate states. Since the decision for Telangana has been taken, there is nothing we can do. But we are now concerned about Darjeeling and the repercussions there," said CPI-M leader Asok Bhattacharya.
The Gorkhaland movement has left many dead over the past two decades besides affecting the region's economy based on tea, timber and tourism.
On July 18, 2011, a tripartite agreement was signed between the GJM and the state and central governments for setting up the (GTA, armed with more powers than its predecessor -- the Darjeeling Gorkha Hill Council formed in the late 1980s.
The GJM now runs the Gorkhaland Territorial Administration after sweeping its maiden elections held in July 2012.