Lebanon's Shia Hezbollah movement and its allies have nominated university professor and former education minister Hassan Diab to be prime minister.
Mr Diab reportedly failed to secure the backing of the main Sunni-led bloc, which could make it difficult to form a new government and secure Western aid.
He emerged as a candidate when outgoing PM Saad Hariri withdrew on Wednesday.
Mr Hariri resigned in October following mass protests fuelled by anger over corruption and economic mismanagement.
Negotiations on a replacement stalled over the make-up of the new government, with some parties backing the protesters' demand for an independent cabinet of unaffiliated technocrats and others insisting that the cabinet includes politicians.
How was the prime minister chosen?
On Thursday, President Michel Aoun held formal consultations with members of parliament on who to name as prime minister - a post that must go to a Sunni Muslim under Lebanon's complex confessional power-sharing system.
Mr Aoun was required to designate the candidate with the most support.
Mr Diab was nominated by the biggest Shia Muslim factions, Hezbollah and Amal, as well as Mr Aoun's Maronite Christian Free Patriotic Movement (FPM). Together the groups control a majority of the seats in the 128-member parliament.
The second-placed candidate was Nawwaf Salam, a former judge at the International Criminal Court at The Hague.
Mr Hariri's Sunni-led Future Movement did not nominate anyone and told the president that it would not participate in the next government, a source close to the prime minister told Reuters news agency.
Mr Hariri had been expected to be nominated for a third term in office after the Sunni religious establishment threw its support behind his candidacy.
But he withdrew on Wednesday night, saying: "It has become clear that despite my absolute commitment to forming a government of specialists, the positions [of others] are not changing."
FPM leader Gebran Bassil, Mr Aoun's son-in-law, called the move "responsible".
What's Mr Diab's background?
Mr Diab, 60, has a PhD in computer engineering from the University of Bath in the UK and has taught the subject at the American University of Beirut since 1985.
In 2006, he was appointed AUB's vice-president of Regional External Programs (REP), the university's consulting and professional development arm.
Mr Diab served as education minister between 2011 and 2014, under then-Prime Minister Najib Mikati.
According to a 2018 biography, Mr Diab is one of only a few non-party affiliated technocrats to have been a minister in Lebanon. He was also the first Lebanese education minister to have a professional background in higher education.
After leaving office, he returned to his teaching and administrative roles at AUB.
Elie Ferzli, the Greek Orthodox Christian deputy speaker of parliament and Hezbollah ally, said Mr Diab's nomination took "into account some of the basic prerequisites wanted by the people" and called him a "person of integrity".
But Mr Mikati, who had backed Mr Hariri's candidacy, said he was sceptical that Mr Diab would be able to lead Lebanon out of its political and economic crises.
Why are people protesting?
The demonstrations have been the largest seen in Lebanon in more than a decade.
They have cut across sectarian lines - a rare phenomenon since the devastating 1975-1990 civil war ended - and involved people from all sectors of society.
In addition to the formation of an independent, non-sectarian cabinet, protesters want an overhaul of the political system and end to government corruption.
Lebanon's debt is equivalent to more than 150% of gross domestic product (GDP), its economy has stagnated, and its currency has lost value against the US dollar for the first time in two decades.
The country's public infrastructure, which was already stretched before more than one million refugees arrived from neighbouring Syria, is also ailing. Electricity and water supplies are disrupted frequently and rubbish often piles up on the streets.
On Thursday, Amnesty International called on the Lebanese authorities to launch a thorough, independent criminal investigation into the violent crackdown by security personnel on largely peaceful protesters in Beirut on Saturday, in which at least 135 people were injured.
The human rights group alleged that security forces used excessive force to disperse protesters, firing huge amounts of tear gas into crowds, and chasing protesters down streets and alleys at gunpoint and beating them.
Low-level clashes also took place on Monday and Tuesday evening, with police using tear gas against protesters throwing stones, water bottles and fireworks.