Italian Prime Minister Silvio Berlusconi formally resigned Saturday, making way for a new government that will be tasked to salvage the country's ruined financial credibility.

The tycoon-turned-politician and longest-serving Italian prime minister since the end of World War Two announced his resignation earlier this week after losing majority support at the House of Deputies in a vote on Tuesday.

Berlusconi suffered a sharp decline in popularity in recent years as the eurozone crisis deepened and the ruling coalition was troubled by political divisions, useless bickerings, and criticisms that its legislations were mainly aimed at protecting politicians' privileges.

His approval rating collapsed this year after the country's debt-driven crisis became acute amid fears that Italy, whose public debt towers about 120 percent of GDP, could be the next victim of the eurozone crisis and would be forced to seek a bailout.

The 75-year-old former prime minister, who owns the largest Italian private TV network as well as the well-known football club AC Milan, also faced a number of criminal charges, including false accounting, tax fraud, bribing a judge, embezzlement and paying for sex with an under-age prostitute.

The trials are still underway, although he denies any wrongdoing and has never been definitively convicted.

Berlusconi had promised to step back once the parliament passes an austerity law with measures asked by the EU to ward off the dramatic scenario when Italian 10-year bond yields topped critical levels.

The law passed the parliament's higher chamber on Friday and got final approval of the lower chamber the next day.

EU leaders have been stressing the need for Italy to quickly implement austerity policies to cut its high debt -- amounting to 1.89 trillion euro (2.59 trillion U.S. dollars).

They include a pledge to raise 15 billion euros (20.6 billion dollars) from public real estate sales over the next three years and a gradual reduction in state ownership of local services.

The package also requires an increase in the standard retirement age to 67 by 2026, sets the stage for a liberalization of closed professions and labor laws within 12 months, and contains tax incentives for companies that hire apprentice workers.

Berlusconi's resignation now opens the way for negotiations to form a new emergency technocrat government as soon as Monday, according to local media.

Should such efforts fail, the parliament would be dissolved and a snap election would be called.

Highly-respected economist and former European commissioner Mario Monti, who was nominated Wednesday as a senator for life, is seen by analysts as the best candidate to succeed Berlusconi.

According to a survey conducted by Ipsos Marketing Research Company, 75 percent of Italians think that a Monti-led technocrat government would be "the first step to exit the crisis" .

As Berlusconi entered the presidential palace to hand his resignation, groups of people gathered outside shouting slogans such as "clown," which made him feel "profoundly embittered", the former prime minister later told the ANSA news agency.

"It is like breathing new oxygen. Now Italy needs serious leaders," a woman told State RAI television channel while showing a placard that read "bye bye Silvio". A man beside her held a banner with the words "This is a historical day" .

In fact, many in Italy see Berlusconi's resignation as the end of what is called by analysts as "Berlusconism", a historical era that started 17 years ago since he became leader of the center-right coalition. He served three terms as prime minister.

"This is the end of Berlusconism," lawmaker Dario Franceschini spoke of Berlusconi's resignation, adding that "the curtain falls on a long and painful phase of Italy's political history. Now the country wants to turn page and start again."