The Belgian Prime Minister, Guy Verhofstadt, has resigned after a stinging election defeat for his Liberals and their Socialist partners.
Mr Leterme wants Belgium's regions to have more power
Mr Verhofstadt will serve as caretaker prime minister while the Flanders PM, Yves Leterme, starts building a new governing coalition.
Mr Leterme's Flemish Christian Democrats made big gains, ending their eight years in opposition.
They won 30 seats in the 150-seat lower house in Sunday's poll.
Mr Leterme says he wants to increase the autonomy already enjoyed by Flanders, the Dutch-speaking northern region where 60% of Belgians live, and French-speaking Wallonia in the south.
The Christian Democrats are embarking on lengthy talks to form a new coalition, which could take at least a month.
Mr Leterme has called for constitutional changes to devolve power to the regions.
"It is time for change. People want a different course," Mr Leterme said.
He has previously caused controversy by saying that a united Belgium was an "accident of history" and that the country has no "intrinsic value".
Mr Verhofstadt said he had done his best but he was to blame for his party's loss at the polls.
"It has been an honour to lead the country and its people. I take personal responsibility for the results," he said.
His Flemish Liberal Democrats party slumped to fourth place with 18 seats, just ahead of the far-right Vlaams Belang - Flemish Interests - party, which won 17 seats.
The French-speaking Reform Movement took second place with 22 seats, while the French-speaking Socialists won 21.
No single party bridges the linguistic and geographic gulf between Belgium's two regions.
Traditionally, the prime minister comes from one of the majority Flemish parties.