Italian Prime Minister Enrico Letta has said he will resign on Friday after his Democratic Party backed a call for a new administration.
Italian Prime Minister Enrico Letta has submitted his resignation after his Democratic Party backed a call for a new administration.
Party leader Matteo Renzi had earlier called for a change of government at a party meeting, saying the country could not go on in "uncertainty".
Party leader Matteo Renzi, 39, had argued that a change of government was needed to end "uncertainty".
Speculation has been rife that Mr Renzi wants to take over as prime minister.
Mr Renzi, who was elected party leader in December, appears poised to be nominated for prime minister.
He is eight years younger than Mr Letta and was elected leader of the party in December.
The announcement has had no impact on financial markets, in contrast with the volatility seen before.
Mr Letta said in a statement that his decision followed "the decision taken today by the national leadership of the Democratic Party".
Before heading to President Giorgio Napolitano to resign, Mr Letta thanked everyone who had helped him during the past 10 months as prime minister.
He said he would formally submit his resignation to President Giorgio Napolitano at the presidential palace on Friday.
Mr Renzi said a new government should take over until the end of the current parliamentary term in 2018.
Relations between Mr Letta and Mr Renzi had become increasingly fraught, the BBC's Alan Johnston reports from Rome.
He accused Mr Letta of a lack of action on improving the economy, with unemployment at its highest level in 40 years and the economy shrinking by 9% in seven years.
The Democratic Party now hopes that Mr Renzi will be able to replace him, and form a new administration, our correspondent adds.
The Italian prime minister failed to implement promised reforms of an often corrupt and wasteful bureaucracy coupled with a bloated parliament, says the BBC's David Willey in Rome.
'No more uncertainty'
Youth unemployment has worsened and Italians have grown increasingly impatient of the slow pace of reform and the continuing decline of families' income and living standards.
Mr Renzi has previously accused Mr Letta of a lack of action on improving the economy, with unemployment at its highest level in 40 years and the economy shrinking by 9% in seven years.
Above all Mr Letta failed to force through a bill that was to change an election law brought in under former Prime Minister Silvio Berlusconi, our correspondent says.
Correspondents say that although the prime minister has kept a careful lid on public expenditure, he has not been able to carry out much-needed administrative reforms and stimulate economic growth.
Mr Letta, 47, formed a coalition with the centre-right last year.
The latest political turmoil has so far had little impact on financial markets, in contrast with the volatility seen before the current coalition was formed.
Angelino Alfano, leader of a centre-right faction that has been part of Mr Letta's government, gave a guarded welcome to Mr Renzi's plans.
Mr Letta did not attend Thursday's party meeting, which had been brought forward from next week.
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.
At the meeting, Mr Renzi thanked Mr Letta for his "remarkable work" but said the country could not go on in "uncertainty".
There is also no guarantee that he is going to succeed in convincing experienced old political hands that he has the capacity to lead, says our correspondent.
He said his proposal - a new government to take over until the end of the current parliamentary term in 2018 - was a way out of the "morass".
Mr Letta, 47, formed a coalition with the centre-right last year but there had been mounting speculation over his future after Mr Renzi was elected party leader in December.
After Mr Letta announced his intention to resign, Angelino Alfano, leader of a centre-right faction that has been part of Mr Letta's government, gave a guarded welcome 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, saying he would not support a new administration whose policies were too left-wing.
