Greek Prime Minister George Papandreou confirmed he will stand down as part of a deal to form a national unity government to tackle the country's debt crisis.
The confirmation came in a statement from the office of the Greek president after urgent talks on Monday morning to form a national unity government.
Greece's main political parties have also agreed that elections should be held on 19 February.
The date should give the unity government sufficient time to complete a bond exchange to reduce the country's debt, as part of the bailout deal.
Mr Papandreou and main opposition leader Antonis Samaras attended talks on Sunday, hosted by President Karolos Papoulias.
Once a new leader has been named, the president is to invite parties to join the new government.
An MP from Mr Papandreou's party, Elena Panariti, said voters had had enough of the political problems.
"Frankly, the Greeks don't want to go another round of political instability. They were not very keen about the (planned) referendum and they're not very keen at all on having elections. They want to have their lives back."
Finance Minister Evangelos Venizelos met with representatives from the New Democracy opposition party to discuss the timeframe of a coalition government.
The coalition is aimed at helping Greece push through a bailout deal it needs to avoid running out of cash next month.
Mr Papandreou had been trying to build a national unity government to replace his Pasok party administration, but Mr Samaras had been refusing to negotiate unless his rival resigned first.
The two men also disagreed sharply on the timing of new elections, with Mr Papandreou seeking a delay of several months while Mr Samaras wanted them immediately.
There has been speculation that the new coalition could be led by Finance Minister Venizelos or by Lukas Papademos, a former deputy president of the European Central Bank, the BBC reported.
A Greek government spokesman said a new administration would be sworn in and a confidence vote held within a week if all went well.
"Today was a historic day for Greece," Ilias Mossialos said.
A spokesman for the New Democracy party said it was "absolutely satisfied" with the outcome of the talks.
