Italian Prime Minister Matteo Renzi has tendered his resignation to the head of state following his defeat in the December 4 referendum when Italians rejected his proposed reforms to the constitution.
President Sergio Mattarella on December 7 asked Renzi to stay on in a caretaker role until a new government is formed.
Mattarella will begin consultations with political parties over forming a new government on December 8, a presidential spokesman said.
Renzi gave his resignation on December 5, but Mattarella told him to stay on until parliament approved the 2017 budget.
The Senate approved the budget earlier on December 7.
The result of the referendum has tipped the eurozone's third-largest economy into turmoil and raised concerns among investors.
There are worries the political instability could pile new pressure on Italy's fragile banking sector and usher in antieuro and anti-EU parties that campaigned hard to defeat the pro-EU Renzi.
Based on reporting by AP and Reuters