Italian Prime Minister Silvio Berlusconi will resign after austerity measures demanded by the European Council were approved, the Italian president's office said in a statement published on its website on Tuesday.
In his meeting with President Giorgio Napolitano, Berlusconi expressed "his awareness of the implications of the result of today's vote (on a 2010 budget report of the government), but at the same time has shown deep concern about the urgent need to give precise answers to the expectations of European partners," the statement said.
Berlusconi's decision came after he lost his parliamentary majority in a vote on the budget earlier on Tuesday.
Both opposition parties and allies have urged the embattled prime minister to step down, after raising concerns over whether Italy can solve its debt problems.
Berlusconi won the budget vote, but received less than half the ballots in the 630-seat chamber, far below the 316 needed for a solid majority.
A total of 308 deputies voted in favor, and one abstention, while 321 MPs did not take part in the vote on the measure including the opposition and ten deputies from the premier's own coalition.
After the vote, Berlusconi held a meeting with his senior ministers before meeting the president for the future of the center-right government.
Meanwhile, opposition leader Pierluigi Bersani urged the Italian prime minister to step down as "his government no longer has a majority in this chamber."
"Mister Prime Minister, I ask you with all my strength to finally take account of the situation and resign, asking the Italian president to find a solution that can enable our country to face this emergency," he said.
"We all know that Italy is running the real risk of not having access to financial markets," he added.
Earlier on Tuesday, Berlusconi's leading political ally Umberto Bossi, leader of the conservative Northern League party in the ruling coalition, also asked him to resign.
"We asked him to step aside," he said outside the parliament before the vote.
The sense of crisis intensified over the last few days as investors are concerned that the combination of Italy's low growth rate and high debt could make it the next country to fall in the eurozone economic crisis.
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