Yale College Dean Donald Kagan resigned last night in a surprise announcement after a speech in which he attacked the faculty for neglecting undergraduate needs during the school's budget crisis.

It marks the second major resignation in three weeks for the university, which has been racked by budget problems. Provost Frank M. Turner said three weeks ago that he would resign at the end of the spring semester.

In is 45-minute speech entitled "The Threat to Yale College," Kagan said the faculty "ambitions," particularly amid severe university-wide budget cuts, were undermining student needs.

The outspoken Kagan, who will step down after spring semester, gave Yale President Benno C. Schmidt Jr. his resignation on Thursday, but did not announce it until last night Schmidt was not available for comment.

Yale's budget deficit has been so severe that plans are underway to eliminate the College" linguistics department, and to make significant cutbacks in the sociology and engineering departments.

Turner, three weeks ago, took criticism from faculty over a cost-cutting plan that would eliminate 11 percent of their jobs.

Kagan, who had planned to take a leave of absence next year, will be succeeded by Donald Engelman, a molecular biophysics and biochem- istry professor, who had already been selectedas interim dean.

Since taking over as dean of Yale's 52undergraduates in 1989, Kagan has been the targetof students and faculty criticism for hisconservative political views. The classics andhistory professor, who first joined the Yalefaculty in 1969, will continue to teach.

This report includes information from wiredispatches.