Conte handed over his resignation to President Sergio Mattarella, according to a statement from the presidential palace.
The president will begin consultations with leaders of the country’s major political parties on Wednesday afternoon, the statement said.
If Conte, who does not belong to any party, has sufficient support, Mattarella can ask him to form a new coalition.
Another option to break the deadlock is to call midterm elections two years earlier.
“The president of the republic has reserved his decision and has requested the government to remain in office to manage ordinary affairs,” the statement said.
If Conte is given the mandate, he will likely look for a broader coalition and add five senators to the fold.
Without a majority in the Senate, Conte would struggle to pass effective legislation at a time of crisis for the European nation, which has been facing years of political instability and new economic challenges amid the pandemic.
Italy has experienced several political crises since the end of World War II and has held many early elections before the incumbent governments have ended their election term. Conte is the country’s 66th leader in 75 years.
His coalition, which was formed in 2019, is led by the center-left Democratic Party (PD) and the anti-establishment Five Star Movement (M5S). Despite huge political differences, the unusual alliance prevented quick elections that could have favored the far-right League Party.
CNN’s Stephanie Halasz contributed to this report.