Prime Minister Gordon Brown has announced he is to step down as leader of the Labour Party.
Speaking outside 10 Downing Street, he also said his party was to start formal talks with the Liberal Democrats.
Until now the Lib Dems have been in talks with the Conservatives, who won the most seats in last Thursday's general election.
Mr Brown's decision will be seen as a move to help ease progress towards a potential Labour-Liberal Democrat government.
As leader of the Labour Party, Mr Brown accepted that the fact no party won an overall majority in the general election "was a judgement on" him.
He said he did not want to stay in power any longer than was necessary to form a stable government and has asked the Labour Party to begin setting up a leadership contest.