The move follows the collapse of conservative Prime Minister Mesut Yilmaz's coalition in a censure vote over corruption allegations.

Chris Morris reports from Ankara

Mr Yilmaz has submitted his formal resignation to President Demirel. His coalition government was the fourth to collapse since 1995.

The president has asked him to stay on as caretaker prime minister until a new government can be formed.

President Demirel has had talks with the leader of the pro-Islamist Virtue Party, the largest party in parliament.

Mr Yilmaz has been accused of entertaining ties with the mafia and tampering with the $600m sale of a state bank. He has denied the charges and has already taken legal action to clear his name.

Majority vote

BBC Ankara Correspondent, Chris Morris: Turkish politics is dominated by personal rivalries and distrust

The Turkish assembly voted by an absolute majority in favour of an opposition motion of no confidence in Mr Yilmaz's government.

The president says he hopes to find a new government within the next four days, but if no coalition is reached he will appoint an interim administration.

Parliament has set early elections for April, but Mr Yilmaz has said they should be held as soon as possible to restore stability and give someone a new popular mandate to govern.

There has been intense speculation about who might lead the next government and how they might form a viable coalition in a bitterly divided parliament.

Correspondents say the fall of Mr Yilmaz leaves Turkish political leaders with a difficult choice of trying to set aside personal rivalries and political feuds to form a new coalition of western-style parties, or accept an alliance with the powerful pro-Islamic bloc.

Opposition to Virtue

Turkey's secular parties, though deeply divided, are anxious to prevent the Islamist Virtue Party, returning to power. The army also strongly opposes Virtue, seeing itself as the protector of secular principles in the mostly Muslim nation.

Mr Yilmaz came to power nearly 17 months ago after Turkey's first pro-Islamic government was forced out of power by the military.

He had acknowledged that he expected to lose the vote of confidence, once a key partner in his coalition had withdrawn its support. But in a show of defiance he refused to resign before the ballot took place.

Many observers think that a government appointed by the president might be the best option. People are so fed up with political antics that they might welcome a government dominated by technocrats, rather than professional politicians.