Swedish Prime Minister Stefan Lofven resigned on Monday, calling on the speaker of parliament to form a new government.
Lofven's resignation comes a week after he became the first Swedish leader to lose a vote of confidence.
Parliament Speaker Andreas Norlen is now expected to enter talks with party leaders who may be able to form a new government.
Lofven, meanwhile, will remain at the helm of the caretaker government, ruling out a snap election, which is described as "not what is best for Sweden."
His Social Democrats, which had been in a coalition with the Green party, remains the largest formation with 100 of the parliament's 349 seats and is expected to start the talks.
The no-confidence motion against Lofven was called by the nationalist Sweden Democrats party — which has been criticising the Social Democratic Party for years — but it ultimately succeeded because the Left Party withdrew its support from the government over proposed legislation to tackle a housing shortage.
Lofven has been able to get the Left Party back as an ally but the small Liberals, which earlier supported the Social Democratic government, now want a centre-right government. The Conservatives, meanwhile, still want Lofven at the helm but don’t want to make deals with the Sweden Democrats or the left-leaning Left Party.
In the centre-right bloc, the Moderates, Sweden’s second-largest party, wants its leader Ulf Kristersson as prime minister.
The last time coalition talks took place in Sweden was following the 2018 election that created a deadlocked parliament. It took four months of negotiations to produce a government that Lofven presented in January 2019.
In Sweden, the next general election will be held on September 11, 2022.