"I recognise that given the situation I cannot deliver the mandate on which I was elected by the Conservative Party. I have therefore spoken to His Majesty the King to notify him that I am resigning as leader of the Conservative Party," Truss said.

A leadership election for MPs to select her successor will be "completed within the next week", she added, according to AFP. "I will remain as prime minister until a successor has been chosen," she said.

According to the BBC, her departure after 45 days in office makes her the shortest-serving PM in UK history.

Truss's premiership has been in turmoil since her mini-budget last month, which rocked markets and was later scrapped by her new chancellor. The resignation of her home secretary on Wednesday and a chaotic vote in the Commons sealed her fate on Thursday.

Market reaction to Truss' resignation

The Sterling pared gains after Truss resigned. Britain's mid-caps jumped as much as 1%.  

Investors reined in bets of a full percentage-point interest rate increase by the Bank of England next month, after a top official said it remained to be seen whether rates rise as sharply as the market has been expecting.  

The pound fell to one week low vs euro and GBP/USD traded above 1.1200 with 1.1192 - 1.1240 in the Asian session range. 1.1186 was Wednesday's three-day low.  

According to Reuters, worries over a deepening political crisis in the UK and rising interest rates globally kept London's main stock indexes under pressure, with shares of homebuilders edging toward a multi-year low hit recently.  

The biggest jump in food prices since 1980 pushed British inflation to 10.1% last month, matching a 40-year high hit in July in a new blow for households grappling with a cost-of-living crisis.  

British banks are bracing for a potential tax hit after a source said finance minister Jeremy Hunt was reviewing the current surcharge on bank profits.  

BBC/News24/Reuters