The Italian parliament on Wednesday voted the government's 2017 budget into law, allowing centre-left premier Matteo Renzi to stand down after his crushing constitutional referendum defeat.
The upper house Senate approved the budget in a vote of confidence, with 173 votes in favour and 108 against.
"The budget law has been approved. I will tender my formal resignation at 7pm. Thanks everyone and long live Italy!" Renzi wrote in a tweet.
Renzi said he would quit after 60 percent of voters in Sunday's referendum rejected his flagship reforms to strengthen the central government and rein in the Senate and the regions.
Italy's head of state Sergio Mattarella asked Renzi to delay resignation until the budget was passed.
Renzi is reportedly set to propose either a government of national unity with as many other parties as possible, or early elections. His ruling Democratic Party (PD) has the largest number of lawmakers so it is unlikely a new government could be formed without his support.
Mattarella has said he does not favour going to the polls until Italy has the compatible electoral systems for both houses of parliament, although the two main opposition parties, the anti-establishment Five-Star Movement and the rightwing Northern League are pushing hard for early elections.
The PD leadership was due to ponder the referendum defeat at summit in Rome on Wednesday. The party is split between Renzi supporters and a minority of left-wing dissenters who spearheaded internal opposition to him and openly called for a 'No' vote in the referendum.
A crucial ruling is due on 24 January by Italy's constitutional court on the legitimacy of the current electoral law, known as the Italicum, which only applies to the lower house of parliament.
