Prime Minister Silvio Belusconi's resignation has been expected after one of the smaller parties in his center-right governing coalition last week withdrew its four ministers and another main partner this week threatened to do the same.
Mr. Berlusconi met with the Italian president Wednesday afternoon and resigned. The head of state will begin consultations with all of Italy's political forces Thursday and is expected to ask Mr. Berlusconi to form a new government later this week.
Earlier Wednesday the Italian prime minister addressed legislators in the upper house of parliament. He said the coalition that had won the election in 2001 was experiencing a difficult phase.
In his speech, Mr. Berlusconi acknowledged that just over two weeks ago Italians gave a clear sign of discomfort in regional elections. The center-right coalition lost 11 of the 13 regions up for grabs in those elections.
The prime minister said the extent of the loss was significant, adding he intended to give an adequate political response.
The prime minister made clear however this is the majority that was chosen by voters to govern the country and this is the majority that will continue do so until the end of the legislature.
Applause erupted in the upper house from members of his coalition parties.
Mr. Berlusconi said this coalition governed during four difficult years for the world. He said these were the years of international terrorism, of the longest European economic crisis and of the change of currency.
Over these four years, Mr. Berlusconi said, this coalition guaranteed a secure leadership to the country.
"We put an end to permanent instability and increased Italy's role and prestige at an international level," he said. "We carried out reforms which had been delayed for decades," he said, "and launched an ambitious effort to carry out profound changes in this country."
Mr. Berlusconi said he was confident a new government will re-launch the center-right coalition.
To do this, he said, he intends to update his government's program, strengthening efforts to defend the purchasing power of families, to support business and to give new and decisive impulse to the development of the south.
If he is asked to form a new government, Mr. Berlusconi is expected to present his new line-up within a week. The government would then need to be put through a confidence vote in parliament.