[/caption]ITALIAN Prime Minister Silvio Berlusconi will resign after passage of a key budget bill.
The announcement capped a tumultuous day that saw the crucial budget vote pass parliament but fail to win the support of an absolute majority and thus maintain Mr Berlusconi's legitimacy as leader.
It also followed weeks of political and legal tumult for Mr Berlusconi, leader of a center-right coalition and a prominent figure on the world stage.
The Italian President's office said in a statement following a meeting between Mr Berlusconi and President Giorgio Napolitano: "Once this commitment (to economic reforms) has been carried out, the Prime Minister will submit his resignation to the head of state".
President Napolitano will then "proceed with traditional consultations with maximum attention to the positions and proposals of every political force - those of the majority from the 2008 elections as well as the opposition," it added.
President Napolitano's office said Mr Berlusconi had shown "his awareness of the implications of the results of today's vote" as well as "concern for the urgent need to give prompt answers to the expectations of European partners".
Earlier, leaders of both coalition and opposition parties called on 75-year-old Mr Berlusconi, Italy's longest serving post-war prime minister, to step aside.
The leader of the main opposition Democratic Party, Pier Luigi Bersani, said, "The Government no longer has a majority in this chamber".
Directly addressing Mr Berlusconi, he added, "Hand in your resignation."
Mr Berlusconi's main coalition partner - the Northern League party leader Umberto Bossi - also joined the chorus of calls for him to step down.
"We asked him to step aside," Mr Bossi said.
The opposition would like to see an independent figure like former European Commissioner and economist Mario Monti head a national unity government, according to Italy's ANSA News Agency.
In the crucial vote on Italy's 2010 public accounts, Mr Berlusconi secured 308 votes to pass the measure, but that was fewer than the 316 he needed to maintain his legitimacy as leader in parliament. There were 321 abstentions.
Borrowing rates hit new records after the vote on investor fears, with the yield on 10-year bonds reaching 6.76 percent and the spread between Italian and German benchmark bond yields widening to a new high of nearly five percent.
Mr Berlusconi spoke bitterly of betrayal as he stormed out of parliament, according to newspaper reports, AFP said.
Eight deputies who refused to support him were labeled "traitors" in a scribbled note captured on camera.
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