Conte handed over his resignation to President Sergio Mattarella, according to a statement from the presidential palace.
The president will start consultations with the leaders of the country’s main political parties on Wednesday afternoon, the statement said.
If Conte, who does not belong to a party, has sufficient support, Mattarella can ask him to form a new coalition.
Another option to break the deadlock would be to call early elections two years earlier.
“The President of the Republic reserves his decision and asked the government to remain in office for the management of ordinary affairs”, the statement said.
If Conte receives the mandate, he will likely seek a broader coalition and add five more senators to the herd.
Without a Senate majority, Conte would struggle to pass effective legislation at a time of crisis for the European nation, which has suffered years of political instability, in addition to new economic challenges in the midst of the pandemic.
Italy has gone through several political crises since the end of World War II and held many early elections before incumbent governments ended their electoral terms. Conte is the country’s 66th leader in 75 years.
Its coalition, which was formed in 2019, is led by the center-left Democratic Party (PD) and the anti-establishment Five Star Movement (M5S). Despite vast political differences, the unusual alliance avoided early elections that could have favored the far-right League Party.
CNN’s Stephanie Halasz contributed to this report.