Italy's Prime Minister Enrico Letta is to stand down after his Democratic Party, the dominant one in the ruling coalition, voted for a change of government
Party leader Matteo Renzi had earlier called for a change of government at a meeting, saying the country could not go on in "uncertainty".
Speculation has been rife that Mr Renzi wants to take over as prime minister. He is eight years younger than Mr Letta and was elected leader of the party in December last year, the BBC reports.
Mr Letta said he would formally submit his resignation to President Giorgio Napolitano at the presidential palace on Friday. The Democratic Party now hopes that Mr Renzi will be able to replace him, and form a new administration.
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.
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.