Foreign Secretary Liz Truss will battle it out against former Chancellor of the Exchequer Rishi Sunak to replace Boris Johnson and become the Conservative party leader and next prime minister of the United Kingdom.
The final two were chosen by Conservative MPs in a final leadership run-off vote which saw Mr Sunak top the results with 137 and Ms Truss second with 113 votes.
Third candidate Penny Mordaunt received the lowest number of votes at 105 and was ousted from the contest.
Ms Truss and Mr Sunak will now put their cases forward to the Conservative Party's 180,000 members who will vote to decide who becomes the new leader on September 5.
The leadership change comes after Mr Johnson resigned as leader of the Conservative Party in early July following a string of scandals that embroiled him and his government.
Mr Johnson will remain the Prime Minister until a new leader is chosen.
The new prime minister will face the cost-of-living crisis, inflation at a 40-year high, increased industrial action, and will need to navigate the Ukraine crisis where the UK has been taking a leading role in rebuking Russia.
Ms Truss thanked Conservative MPs for "putting your trust in me" and said she was "ready to hit the ground from day one" in an initial Twitter post that was deleted shortly after and reposted to read "hit the ground running from day one".
Mr Sunak posted a video message to his Twitter page, saying he was "grateful that my colleagues have put their trust in me today".
Both are senior figures in the party and pulled out of a third televised debate last Monday after previous debates saw brutal exchanges where candidates attacked each other's credentials to lead in comments seen as detrimental to the party.
Ms Truss, 46, is viewed as a Johnson loyalist, having stayed in the Prime Minister's cabinet while other senior ministers deserted him earlier this month, and has been backed by the Conservative Party's right faction.
She is seen as the frontrunner in the leadership contest, with polling of Conservative members giving her a 20-point lead over her rival.
On the other hand Mr Sunak, 42, has been blamed by some quarters for helping bring down Mr Johnson's premiership when he resigned from his role as chancellor of the exchequer two days before Mr Johnson eventually quit.
At the end of last year Mr Sunak was tipped as the top candidate to succeed Mr Johnson, but his standing took a hit after it was revealed his billionaire-heiress wife had not been paying tax in the UK on foreign earnings.
He was also caught up in the "partygate" scandal which saw him receive a fine from police for breaching coronavirus restrictions.
'Hasta la vista, baby!'
The day also marked the final appearance of outgoing Boris Johnson at Prime Minister's Questions on Wednesday, where he was given a standing ovation by Conservative MPs as he left the House of Commons as Prime Minister for the last time.
Mr Johnson reflected on his bumpy three-year reign in the top job, which saw him win an 80-seat majority in the December 2019 general election, nearly lose his life to COVID-19 and also become the first sitting prime minister to have broken the law when he was fined for breaching lockdown laws his government introduced.
"The last few years have been the greatest privilege of my life, and it's true that I helped to get the biggest Tory majority for 40 years and a huge realignment in UK politics," he said.
"We've transformed our democracy and restored our national independence."
He also pointed to the UK's response to the pandemic and his government's support of Ukraine as successes in his legacy, before bidding farewell with a famous line from actor-turned-politician Arnold Schwarzenegger's 1991 film Terminator 2.
"And frankly, that's enough to be going on with – mission largely accomplished.
"I want to thank everybody here and hasta la vista, baby."
One Conservative MP who did not join in on the applause was former PM Theresa May, who had been increasingly critical of the Johnson government's policies.
Mrs May, who Mr Johnson replaced as prime minister in July 2019, reluctantly stood up but her arms remained by her side while her colleagues clapped the outgoing PM off.
