Italian President Giorgio Napolitano on Saturday signed a decree dissolving parliament and clearing the way for February 24-25 elections, following consultations with the country's political leaders, his office said, DPA reported.
The decision came after senior Italian party officials told Napolitano that there was no point in extending the current legislature - due to end in April - in the wake of Prime Minister Mario Monti's resignation a day before.
Monti is expected to remain in charge as a caretaker until the elections.
The first to consult with the president were officials from former premier Silvio Berlusconi's conservative People of Freedom (PDL) party, the largest of the outgoing legislature, who urged Monti to remain "neutral" during the campaign.
"Going into elections with an unelected technocratic government, Mario Monti will have to remain above the fray," said PDL whip Fabrizio Cicchitto.
Monti resigned on Friday, describing his 13 months in office as "difficult, but fascinating," after the PDL decided to stop supporting his non-partisan government.
The former European Union commissioner is reportedly being courted to lead a centrist coalition featuring Ferrari boss Luca Cordero di Montezemolo, rebels from Berlusconi's camp and Christian Democrats.
The 69-year-old economist, who has been credited with restoring Italy's battered credibility with financial markets, is expected to clarify his political future at a press conference scheduled for Sunday.
Officials from the other major party backing the outgoing government, the centre-left Democratic Party (PD), thanked Monti for his efforts and said Italy now deserved a new phase, one in which "those who have more, pay more, and those who have less, pay less."
The right-wing Northern League, the only major party to oppose Monti's technocratic government, said it was "happy" that he had resigned, arguing that the premier's austerity policies had caused "plenty of problems for the country."
Saturday's consultations at the presidential palace formally ended 13 months of technocratic rule following Berlusconi's resignation in November 2011 amid intense financial pressure.
Having already been appointed a life senator, Monti is not expected to run for a parliamentary seat, but could enter the contest as a prime ministerial candidate.
With the PD clearly ahead in opinion polls, Cicchitto had earlier urged Monti to join forces with Berlusconi - who would be contesting his sixth election - rather than split the anti-left vote. However, Monti has hinted that he is unlikely to take up the offer.
Italy is undergoing a severe recession and youth unemployment is at a record 36.5 per cent. The PDL blames Germany for forcing overly harsh economic policies on weaker eurozone peers, and has accused Monti of failing to resist them.