Pedro Sanchez has been formally named caretaker prime minister of an interim government that will remain in place until Spain resolves the political uncertainty that emerged from Sunday's inconclusive elections.
Although Alberto Nunez Feijoo's right-wing Popular Party (PP) won the vote, it fell short of a governing majority, handing Sanchez's Spanish Socialists Workers Party (PSOE) a lifeline as they have more options to create alliances with smaller parties.
"I hereby declare the dismissal of Pedro Sanchez as head of government who will remain in office until a new prime minister takes office," King Felipe VI said in the official State Gazette.
If the political deadlock is not resolved in the coming months, Spain will likely have to hold a repeat election.
Although Feijoo's PP won 136 of the 350 seats in parliament it fell far short of the 176 needed to govern, and even with the support of the far-right Vox it can only reach 169.
Even so, Feijoo has demanded the right to form a minority government as winner of the vote, and on Monday began talks with various regionalist parties which look certain to fail given Vox's extreme positions and strong opposition to regional autonomy.
The Basque PNV party, which won five seats, has said that it has no interest in talking with Feijoo.
Although the left-wing bloc won fewer seats, with the PSOE finishing second with 122 seats and its radical-left ally, Sumar, winning 31, they can seek support from ERC, a left-wing Catalan separatist party and the Basque separatists Bildu.
The biggest challenge for Sanchez would be to secure the abstention of hardline Catalan separatist party Junts in a parliamentary investiture vote.
Sumar said that it has tasked one of its Catalan representatives to seek talks with Junts which, with its seven seats, now has a crucial role to play in government formation, even if that role is abstention.
If everything came together, Sanchez could rally 172 lawmakers behind him, which would be enough to get through a second investiture vote where only a simple majority is required.
But the two rival blocs are still waiting for the votes from abroad to be counted, which will only begin on Friday and could take several days.
Media reports said those figures could swing the seats in one direction or another in provinces where only a few votes separated the left and the right.
