Mr John Bruton TD has resigned as leader of Fine Gael after losing a no-confidence motion by 39 votes to 33.
The vote came tonight after a parliamentary party meeting which had lasted for over seven hours. The parliamentary party will meet again at 11.30 a.m. to decide arrangements for the election.
Addressing the media after the vote Mr Bruton said he was "deeply disappointed."
But he added: "I am more than happy to accept the decision by Fine Gael to elect a new leader. That person will have my complete support.
"I am completely certain that Fine Gael will be in power after the next general election."
Mr Bruton said he would definitely be contesting his seat in the next general election, but declared that he was withdrawing his candidacy for the position of Party President, due to be decided at the next Fine Gael Ard Fheis.
The motion of no confidence was tabled by senior party figures Mr Michael Noonan and Mr Jim Mitchell.
The two challengers appeared minutes after Mr Bruton’s departure. They both paid tribute to the former leader, but said that a change was vital for the future of Fine Gael.
"The party has shown a level of communication and talent that hasn’t been seen for a very long time.," Mr Noonan said.
"There will be a meeting tomorrow morning when the party will decide how they see fit to fill the vacancy for leader."
Mr Mitchell said "it was a very painful experience for all of us."
He described the debate as "a very, very intensive and civilised parliamentary party debate".
"I believe history will judge John Bruton very well...but it’s time to give Fine Gael a new start, a new beginning."
Asked whether himself or Mr Mitchell would be challenging for the leadership, Mr Noonan said it had not yet been decided.
"There are other people who may be interested in the position of leader of Fine Gael."
Flanking an emotional Mr Bruton during his statement to the media were an estimated thirty of his supporters, including the deputy party leader, Ms Nora Owen.
She paid tribute to the "integrity of John Bruton" and said: "It has been my proud honour to have been John Bruton’s deputy since he appointed me in 1993.
"We are very sad at your departure."
Mr Phil Hogan, the Chairman of Fine Gael, also paid tribute to Mr Bruton, but said: " I would appeal to the party to unite behind the new leader of Fine Gael. I have no doubt that the party will not suffer a deep division because of this."
Under Fine Gael party rules, a new leader must be elected in no less than seven days and in no longer than a month.
The meeting lasted much longer than expected, after a motion proposing to limit the number of speakers was defeated earlier this afternoon.
Those who voted included 53 TDs, 16 senators and the party’s four MEPs.
Mr Bruton was elected leader of Fine Gael in 1990.
