Italian Prime Minister Romano Prodi has handed his resignation to the country's president after losing a crucial foreign policy vote in the Senate.
Troop deployments have split Mr Prodi's coalition
President Giorgio Napolitano is now expected to hold talks with political leaders before reaching a decision.
He could accept the resignation or ask Mr Prodi to stay in power.
In the vote, several of Mr Prodi's coalition partners opposed troop deployments in Afghanistan and plans to expand a US airbase in northern Italy.
The BBC's Jonny Dymond says it is not a foregone conclusion that the government will fall.
Mr Napolitano has several options, of which dissolving parliament and calling new elections is the most radical.
A spokesman for the prime minister said Mr Prodi needed the full support of the coalition if he was to continue.
"Prodi has acknowledged this is a serious crisis and he doesn't have a majority in the Senate," Silvio Sircana said.
"He is ready to carry on as prime minister if, and only if, he is guaranteed the full support of all the parties in the majority from now on."
The coalition's leader in the lower house of parliament, Dario Franceschini, said the main parties in the coalition would continue to back him.
"We are ready to renew our full confidence in Prodi," he said.
"Let's hope the consultations will be useful to clear things up."
Mr Napolitano cut short a trip to Bologna