British Prime Minister Gordon Brown today announced his resignation, and Conservative leader David Cameron immediately announced the formation of a new government.
"I wish the next prime minister well as he makes the important choices for the future," Brown told reporters in Downing Street this evening.
"I have been privileged to learn much about the very best in human nature and a fair amount too about its frailties, including my own," he said before going to Buckingham Palace to formally tender his resignation to the queen.
According to protocol Cameron is then called by the queen and asked to form a government, which will bring an end to five days of intense political negotiations between Britain's three main parties.
The markets and the electorate were both growing restless with the situation after last week's elections yielded no clear winner and Britain's first hung parliament since 1974.
While most political pundits are predicting Cameron will form a formal coalition with the Liberal Democrats, some are saying a looser "supply and confidence" agreement may be more likely.
Cameron has made it clear from the start that he favors a formal coalition.
"It's now, I believe, decision time," Cameron told reporters earlier today as he waited for a decision by Liberal Democratic leader Nick Clegg. "Decision time for the Liberal Democrats and I hope they will make the right decision to give this country the strong, stable government that it badly needs and badly needs quickly."
A senior Lib-Dem leader told the British media "a deal is very close" after today's crucial talks with the Conservative team.
Clegg's team has been in formal talks both with Labour and the Conservative parties.
"I'm as impatient as anybody else to get on with this, to resolve matters one way or another," Clegg told reporters outside his house this morning.
It had been unclear earlier today which way Clegg was going to go after Brown's surprise announcement that he had been approached by Clegg "to take forward formal discussions with the Labour party".
But earlier today reports emerged that these talks had ended in failure. "There was no deal to be done" a senior Labour source told the BBC, making Brown's resignation the next logical step.
Dubbed by the British media as the "coalition of the losers" a Labour and Liberal Democrat alliance could still not have held a majority in the houses of parliament.
Even within the Labour party this union was met with resistance. Some questioned the party's moral legitimacy to govern after it came in second in last week's elections.
"I fail to see how trying to bring together six different parties — and even then not having a majority — will bring the degree of stability we need," former Labour cabinet minister John Reid told the BBC today.
"It may be perceived as acting in our own self-interest. The public aren't daft."