Italian Premier Silvio Berlusconi resigned tonight, Italy's presidential palace said.

The move sets in motion a transition aimed at bringing Italy back from the brink of economic crisis.

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

A chorus of Handel's Alleluia, performed by a few dozen singers and classical musicians, rang out in front of the palace as thousands of Italians poured into central Rome to rejoice at the end of Mr Berlusconi's scandal-marred reign.

Hecklers shouted "Buffoon, Buffoon!" - as Mr Berlusconi's motorcade entered and exited the presidential palace, where he tendered his resignation to President Giorgio Napolitano.

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.

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