Maltese media have said Muscat might stay in office till January, when a party congress must elect a new leader.
Joseph Muscat became Malta's Prime Minister prime minister in 2013 at the age of 39 and remained in power despite corruption scandals that dogged him and his associates.
Demonstrators have demanded his immediate resignation over the inquiry into Daphne Galizia's death.
After meeting for four hours, Labour's parliamentary group released a statement saying that MPs gave "unanimous support to all decisions which the Prime Minister will be taking".
Muscat added that he would continue to carry out his responsibilities and ensure stability in the country until his resignation.
On Saturday prosecutors charged Yorgen Fenech, a 38-year-old millionaire tycoon who was arrested on his yacht, with conspiracy in the assassination, alleging he organised and financed the auto bombing.
"Our country thus will start a short process of approximately a month for the Labour Party to choose a new leader and a new prime minister", he added.
Galizia was reportedly killed by a auto bomb in Malta on October 16, 2017.
It wasn't immediately clear if Muscat might resign amid increasing calls by citizens on the island, including Caruana Galizia's family, for him to step down. So far though Mr Muscat has refused to go.
Mr Schembri has denied any wrongdoing. Leaked emails revealed in court docket indicated that each Schembri and Mizzi stood to obtain funds from a Dubai firm known as 17 Black, owned by Fenech.
Muscat reminded them that he kept his word that justice would be done with the investigation of the journalist's murder.
In 2017, Galiza was killed by a vehicle bomb as she investigated corruption among Malta's business and political elite.
And also: "Complicity in the wilful homicide of Daphne Caruana Galizia, conspiracy to commit a crime in Malta punishable by imprisonment and complicity in causing an explosion which caused Caruana Galizia's death".
Copies of photographs showing Mr Muscat former chief of staff, Keith Schembri, along with Melvin Theuma, an intermediary for the alleged murder Caruana Galizia, which is pinned to the gate of the building. He denies any wrongdoing.
It was the first time since independence from Britain in 1964 that the Labour Party had won two successive elections in Malta.
The prime minister of Malta is stepping down.
However, Fenech's lawyers said the prime minister should not be the one to decide on the request, because he may be among "persons who may have an interest for such a pardon not be granted".
Caruana Galizia's reporting was continued by the Daphne Project, determined to root out wrongdoing in Malta, which is a financial haven for many business figures from overseas.
Schembri, a close friend of Muscat's, and former Tourism Minister Konrad Mizzi both resigned on Tuesday.
The three have pleaded not guilty and are still awaiting trial.