Florence mayor Matteo Renzi is expected to be offered the chance to become Italian prime minister, as talks begin on forming a new government.
President Georgio Napolitano is starting consultations following the resignation of Enrico Letta.
He was ousted in a vote called by Mr Renzi at a meeting of their centre-left Democratic Party. The 39-year-old would be Italy's youngest prime minister.
Mr Letta was under increasing pressure over Italy's poor economic performance.
After accepting the prime minister's resignation, Mr Napolitano's office said talks would begin with political leaders on finding a replacement.
The consultations would be conducted swiftly to find an "efficient solution" and they would conclude on Saturday, the statement added.
Mr Letta's position became untenable once the Democratic Party backed a call for a new administration.
Mr Renzi had argued that a change of government was needed to end "uncertainty".
A new government should take over until the end of the current parliamentary term in 2018, he said.
He had accused Mr Letta of a lack of action on improving the economic situation, with unemployment at its highest level in 40 years and the economy shrinking by 9% in seven years.
The Italian prime minister was also accused of failing to implement promised reforms of what is seen as an often corrupt and wasteful bureaucracy.
Youth unemployment has risen and Italians have grown increasingly impatient of the slow pace of reform and the continuing decline of families' income and living standards.
Mr Letta, 47, only lasted 10 months in the post after forming a coalition government with the centre-right last year.
The prime minister, who drove himself from the presidential palace after resigning, took to Twitter to thank "all those who have helped me".
Angelino Alfano, leader of a centre-right faction that has been part of Mr Letta's government, gave a guarded response to Mr Renzi's plans.
There was no guarantee that an attempt to form a new government under Mr Renzi would work, Mr Alfano said, adding he would not support a new administration whose policies were too left-wing.
The leader of the anti-establishment Five Star Movement, former comedian Beppe Grillo, said he would not be taking part in the negotiations. His party garnered a quarter of the vote in last year's election.