Italian Prime Minister Enrico Letta has submitted his resignation to President Giorgio Napolitano.
The president will hold discussions today and tomorrow to nominate Mr Letta’s successor, the presidency said.
Mr Letta "submitted his irrevocable resignation", according to a statement from the presidency.
Italian centre-left leader Matteo Renzi is now one step away from forming a new government after he swiftly eliminated party rival Mr Letta as prime minister.
Mr Letta's resignation came after Mr Renzi and the rest of the centre-left Democratic Party (PD) leadership forced Mr Letta's hand by withdrawing their support at a special meeting yesterday.
Mr Renzi, 39, whose PD is the biggest party in parliament, could be named premier as soon as this weekend.
If appointed he would be Italy's youngest-ever prime minister and the third in succession to be appointed without winning an election.
However, he faces intense pressure to achieve the structural reforms that have eluded Italy for years.
Though he has long been agitating for sweeping change in Italian politics and won a landslide victory for his party's leadership in December, few had expected him to snatch power from Mr Letta so soon.
Mr Renzi's decision to bring down the prime minister matured over the past fortnight, according to people close to him.
It comes after mounting pressure from Italy's business lobby, which has criticised the Letta government for not doing enough to help the country's struggling corporate landscape.
Economic data today underlined the scale of the challenge Mr Renzi faces in using his decisive, and at times ruthless, political tactics to tackle the deep structural problems that have made Italy one of the world's slowest growing economies over the past two decades.
Statistics office ISTAT reported that the economy eked out growth of 0.1% in the final quarter of last year, the first rise in Italian gross domestic product since mid-2011.
The meagre scale of the increase underlines how far Italy has fallen behind other European economies including France or Spain, let alone Germany.
Italian GDP was still down 0.8% from the fourth quarter a year earlier, and over the whole of 2013 it contracted by 1.9% after a 2.6% drop the year before.
Today's numbers are a reflection of a deeply-rooted decline.
Italy is still the third largest of the eurozone's economies, but it is now smaller than it was a decade ago.
Over the past five years, its industrial output has fallen by 25% and in the southern half of the country less than half of the working age population has a job.
It has a €2 trillion public debt and 12.7% unemployment, a level not seen since the 1970s.