Liz Truss has resigned as Tory leader after a chaotic 44 days in office, with a new prime minister expected to be in place by the end of next week.
She signalled the end of the shortest term by any prime minister following a botched financial statement, the loss of two of her most senior Cabinet ministers and an open revolt by Tory MPs.
The Tories will now scramble to find a replacement who will become the third leader in two months.
Allies of former leader Boris Johnson pushed for him to make a comeback, while Rishi Sunak, who defeated Ms Truss among MPs in the last contest, also has supporters at Westminster.
Labour demanded a general election, while Tory leadership hopefuls were assessing their chances of taking over.
A little over 24 hours after insisting she was “a fighter, not a quitter”, she stood at a lectern in Downing Street and said she had informed the King she was resigning as Tory leader.
She said she recognised she “cannot deliver the mandate” which Tory members gave her a little over six weeks ago when she replaced Mr Johnson.
Her announcement followed talks with the chairman of the 1922 Committee of backbench Conservatives, Sir Graham Brady, where it became clear she could not hope to carry on.
The Prime Minister, accompanied by husband Hugh O’Leary, said a short leadership contest “will ensure that we remain on a path to deliver our fiscal plan and maintain our country’s economic stability and national security”.
“I will remain as Prime Minister until a successor has been chosen.”
Her decision to resign will trigger a scramble among Tory leadership contenders who will face a daunting task to revive the party’s fortunes.
Chancellor Jeremy Hunt was quick to rule himself out as he focuses on calming the financial markets, while Michael Gove will also sit out the contest.
Trade minister Sir James Duddridge, Mr Johnson’s former parliamentary aide, used the hashtag #bringbackboris on Twitter, saying: “I hope you enjoyed your holiday boss. Time to come back. Few issues at the office that need addressing.”
Commons Leader Penny Mordaunt, viewed as a potential leadership contender after coming third among MPs in the last contest, said she would “keep calm and carry on”.
Justice Secretary Brandon Lewis has been encouraged to stand by colleagues, allies said.
Sir Graham said the process could be concluded by October 28 so the new leader can be in place in time for a crucial financial statement on October 31 which is intended to reassure the City of London that the Government has a plan to repair the nation’s finances.
He said there was an expectation that Tory members would be involved in the process but “I think we’re deeply conscious of the imperative in the national interest of resolving this clearly and quickly”.
The contest to replace Mr Johnson lasted longer than Ms Truss’s premiership, paralysing the Government at a time of a cost-of-living crisis.
Labour leader Sir Keir Starmer demanded a general election “now” so that the nation can have “a chance at a fresh start”.
Without a general election, the Conservatives will be on their third prime minister on the mandate won by Mr Johnson in December 2019.
Sir Keir said: “The British public deserve a proper say on the country’s future. They must have the chance to compare the Tories’ chaos with Labour’s plans to sort out their mess, grow the economy for working people and rebuild the country for a fairer, greener future.”
Ms Truss’s leadership had been on life support since the markets turned against her following the September 23 mini-budget which promised £45 billion of unfunded tax cuts on top of a massively expensive energy support package.
Axing chancellor Kwasi Kwarteng and abandoning most of the plans helped calm the turmoil – as did an emergency intervention in the bond markets by the Bank of England – but left her premiership holed below the waterline.
Wednesday’s chaos, which saw Suella Braverman resign as home secretary, officially for using a personal email to send a sensitive document but also while she was at odds with the Prime Minister over immigration policy, added to pressure on Ms Truss.
And the ugly scenes in the Commons as Tory MPs were threatened with having the whip suspended if they rebelled over fracking further separated the Prime Minister from her parliamentary party.
The number of Tory MPs publicly demanding Ms Truss’s resignation doubled before lunch was over on Thursday, taking the total to 15, but a far greater number were privately agitating for her exit, as Sir Graham made clear to the Prime Minister.
The pound lifted on the resignation announcement following another volatile 24 hours for the currency amid political turmoil.
We don’t need another Conservative Prime Minister lurching from crisis to crisis. We need a general election now and the Conservatives out of power— Liberal Democrat leader Sir Ed Davey
Liberal Democrat leader Sir Ed Davey said: “We don’t need another Conservative Prime Minister lurching from crisis to crisis.
“We need a general election now and the Conservatives out of power.”
Ms Truss had summoned Sir Graham to Downing Street for a hastily-arranged meeting on Thursday morning, with sources saying she was “taking the temperature” of the Tory Party.
What Sir Graham told her was unclear, but she was left realising her time was up. “The statement was the result” of their conversation, a source confirmed.
Ms Truss’s 44 days in office falls months behind the next shortest premiership of Tory statesman George Canning, who spent 118 full days as PM in 1827 before dying in office.
