Swedish Prime Minister Stefan Lofven, who lost a confidence vote last week, has offered his resignation and asked the parliamentary speaker to find a new government.
The Social Democrat leader rejected the alternative option of calling snap elections.
So far, negotiations with other parties to secure a more stable coalition have been unsuccessful even if a last-minute deal cannot be ruled out.
Lofven, who had been in power since 2014, became the first Swedish prime minister to lose a vote of confidence last week over planned reforms to the country's rental controls.
The no-confidence motion in Lofven's government was called by the nationalist Sweden Democrats party, but it ultimately succeeded because the Left Party had withdrawn its support from the government.
On the left, the proposal to deregulate the rental market is seen as being at odds with the Swedish social model and a threat to tenants' rights.
According to the Swedish Constitution, a snap election would come on top of next year's planned ballot and would therefore see the Swedes brought to the polls twice in a little over a year.
An Ipsos opinion poll published Tuesday predicted that the right and far-right would win a slim parliamentary majority should such a snap poll take place.
Under this scenario, far-right party Sweden Democrats, which is polling at 19%, could become a kingmaker, unleashing a political earthquake in the Scandinavian country.
But Lofven rejected that option on Monday. His resignation offer means it will be up to parliamentary speaker Andreas Norlen to open negotiations to find a new prime minister.
That could pave the way for Moderate Party leader Ulf Kristersson to become prime minister, according to the Expressen daily newspaper.
Lofven could theoretically find himself at the helm of a caretaker government until a solution is found.
Norlen will have to consult each party before proposing a new prime minister, meaning the process could be a slow one. In 2018, such consultations took 115 days.
The parliamentary speaker will then need backing from 175 MPs for his choice. If he fails to do so, then a general election will likely follow.