Italian President Sergio Mattarella has accepted the resignation of Prime Minister Giuseppe Conte and will kick off consultations with party leaders on Wednesday to seek a solution to the political crisis, his office said.
Mattarella asked Conte to remain in office to carry out day-to-day government business while the discussions continue.
Mattarella will start his meetings at 1400 GMT on Wednesday and wrap them up on Thursday afternoon.
He is expected to see whether there is the political will to form anew government. If not, he will have to dissolve parliament, 3-1/2 years ahead of schedule, and call early elections.
Earlier, Conte announced his resignation as he made a blistering attack on his own interior minister, Matteo Salvini, accusing him of sinking the ruling coalition and endangering the economy for personal and political gain.
Conte, addressing parliament after it was recalled from its summer recess to decide the future of the barely year-old government, accused League party chief Salvini of seeking to cash in on his rising popularity.
"(Salvini) has shown that he is following his own interests and those of his party," Conte told a packed Senate, a stony-faced Salvini sitting by his side. "His decisions pose serious risks for this country."
TRT World's Jon Brain reports.
He described Salvini's actions as "serious institutional recklessness, above all showing disrespect to parliament and liable to tip the country into a spiral of political uncertainty and financial instability".
Conte, who belongs to neither of the coalition's two parties, is to hand in his resignation later in the day, allowing the head of state to start formal consultations with parties to see if a new coalition can be formed.
Failing that, President Sergio Mattarella would dissolve parliament.
TRT World spoke to journalist Sabina Castelfranco in Rome for more.
Salvini at times shook his head, rolled his eyes or nodded to League senators as the prime minister unleashed his fierce critique of Salvini's actions over the past two weeks.
Salvini, who moved to sit with his League senators to give his response, rejected Conte's comments, saying other parties were afraid of going to elections and losing their jobs.
He said his political goal was to challenge the European Union's fiscal rules, which he has blamed for impoverishing the country. Rome should spend at least 50 billion euros ($55 billion) to stimulate the chronically weak economy, he added.
"I am not afraid," he said.
On the other side of Conte sat Luigi Di Maio, head of the League's now-estranged coalition partner, the 5-Star Movement, which was branded as obstructionist by Salvini over the past 12 days, since he pulled the plug on their alliance.
Salvini has demanded early elections, 3-1/2 years ahead of schedule, confident his surging popularity will sweep him into power as prime minister and push the anti-establishment 5-Star into opposition.