Italy's presidential palace has confirmed that Premier Silvio Berlusconi has resigned, setting in motion a transition aimed at bringing Italy back from the brink of economic crisis.

Cheers broke out in front of the palace by the hundreds of people who gathered to witness Berlusconi's final act in office, ending a 17-year political era.

Respected former European commissioner Mario Monti remained the top choice to try to steer the country out of its debt woes as the head of a transitional government, but Berlusconi's allies remained split over whether to support him.

Their opposition probably won't scuttle President Giorgio Napolitano's plans to ask Monti to try to form an interim government once Berlusconi resigns, but it will likely make Monti's job more difficult.

Napolitano appealed Saturday for lawmakers to put the good of the country ahead of short-term, local interests; an indirect appeal to members of Berlusconi's party and the allied Northern League to work with the new government.

``All political forces must act with a sense of responsibility,'' he said.

Berlusconi's resignation was expected after the Chamber of Deputies, with a vote of 380-26 with two abstentions, approved economic reforms which include increasing the retirement age starting in 2026 but do nothing to open up Italy's inflexible labour market.

(The Associated Press)