Although the opposition Five Star Movement is very keen on early elections, the "No" vote has put the block on reform of Italy's election law. That means the chance of a parliamentary majority is slim: Italy has one electoral law for the lower house and another for the Senate, which is voted in by proportional representation.

So President Sergio Mattarella is most likely to appoint a caretaker government that can steer Italy through 2017, before elections in February 2018.

In that time, the government could then pass a budget for 2017 and change the electoral law in time for a new general election.

Image source, Reuters

Finance Minister Pier Carlo Padoan, 66, is seen as the front-runner to replace Matteo Renzi as Italy's prime minister.

On Monday, he skipped a meeting of eurozone finance ministers in Brussels, and his place there remained empty.

Italian President Sergio Mattarella is expected to announce a decision later.

Image source, Reuters

Italian President Sergio Mattarella has given his first reaction to the "No" vote, praising the high turnout as "testimony to a solid democracy and an enthusiastic country". 

Describing Italy as "a great country with a great deal of positive energy within it", he calls for a political climate with "serenity and mutual respect".

Before us, he says, lie obligations and deadlines which Italy's institutions will have to honour, "guaranteeing a response that meets the problems of the moment".

All eyes are on him now. PM Matteo Renzi is expected to hand in his resignation later on Monday. Then the next steps will fall to the president.

This is how events are likely to unfold this afternoon: Mr Renzi is expected to hand in his resignation to President Sergio Mattarella after a cabinet meeting at 18:30 local time (17:30 GMT), the BBC's Julian Miglierini reports from Rome.

They both met for one hour this morning, but details of their meeting have not been revealed.

UK Prime Minister Theresa May, currently grappling with the consequences of a referendum in her own country, has reacted to the vote in Italy. A spokeswoman stressed the vote was "a decision for the Italian people".

Prime Minister Matteo Renzi has spoken for the first time since he announced his resignation on Sunday. "A thousand difficult but wonderful days," he tweeted.

A video in Italian says exports and job numbers are up, and unemployment is down to 11.7% of the workforce.

It is a well-produced look-back on his 1,017 days in office, which perhaps suggests his team were not necessarily unprepared for his departure. 

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Italian financial commentator Gianluca Codagnone says initial market volatility is less important than reaction to the incoming government.

The head of Milan-based Fidentiis Equities told Il Sole 24 Ore, external newspaper: "Today there could be an emotional reaction, but we will actually have the true response of the markets when it becomes clear to whom President Sergio Mattarella will entrust the task of forming a new government, and how much credibility the new government has.

That will be the reaction that really matters." 

After many failed to foresee Britain leaving the EU, and even less predicted Donald Trump's election, Italy's referendum marks a much-needed victory for the pollsters.

All surveys before a legal-cut off proved correct, Reuters reports, but even then none came close to showing how far the Yes side would lose.

"A lot of people who said they were going to abstain ended up voting, and nearly all of them voted against Renzi," said Federico Benini, the head of the Winpoll agency.

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The German press is generally harsh in its assessment of Matteo Renzi, but sees no need for immediate panic. 

Centre-right Frankfurter Allgemeine Zeitung, external asks "how bad can it get for Italy?" and concludes that "panic is unlikely" as the country is used to frequent changes of government. It says technocratic cabinets there "have sometime done a better job than regular governments". 

"Calm down!" demands left-wing Tageszeitung, external's Michael Brain in an Italian headline, saying that the vote is "neither a win for the populists nor a defeat for democracy, and talk about the downfall of Europe is panic". Above all, he says the failure of Matteo Renzi's centralising constitutional proposals ensures that the populist Five Star movement will not be able to win a majority in parliamentary elections. 

But centre-left Sueddeutsche Zeitung, external's Oliver Meiler says Mr Renzi was "complacent" in government and "gambled foolishly" with the referendum, and fears the reform impetus will end with the "fiasco" of the referendum result. 

Conservative Die Welt, external's Constanze Reuscher reports from Rome that the "two stars" in Five Star most likely to play a major role in coming months are Luigi Di Maio and Alessandro Di Battista. She says they distance themselves from movement chief Beppe Grillo's populism in favour of seeking to "work with Europe" on economic and migrant issues. 

We now know that Mr Renzi has already spent an hour with President Sergio Mattarella. Presumably they will have discussed the next step which, after Mr Renzi hands in his resignation, falls to the president.

The Italian president is a largely ceremonial figure, but he wields important powers at times of political instability. He can dissolve parliament, call elections and pick prime ministers. 

And this is Mr Mattarella's first real test since he was sworn in early in 2015. The main parties in the "No" camp -  the Five Star Movement and anti-EU Lega Nord - want him to call elections as soon as possible.

But the president is more likely to call for a Democratic Party-led caretaker government, possibly under Finance Minister Pier Carlo Padoan, who has skipped a eurozone finance ministers meeting in Brussels because of the result.

Image source, Getty

As Italy gets to grips with its uncertain political future, it has been less than six months since the UK's Brexit vote triggered the resignation of another prime minister, David Cameron.

The UK's Supreme Court on Monday began hearing the government's appeal against a court ruling that Parliament should give its consent before the EU article invoking the Brexit process could begin.

Live updates on that story are here.

Financial markets have been taking the news in their stride.

Initial falls have given way to rises. The euro, which was at one stage at its lowest against the dollar since March 2015, has also recovered.  

Analysts say investors had already factored in Mr Renzi's resignation, and were reassured by the swiftness of his departure.

 "The initial market reaction was to the downside, but Renzi's decision to leave so quickly after the result meant that added clarity drove the euro and European equity markets to the upside," GKFX analyst James Hughes told AFP.

Economist Mario Monti, who was brought in as PM of a technocrat government in Italy in December 2011, has explained why he voted against Matteo Renzi's constitutional reforms. Many Italians did not want to be forced to give a political judgement on the constitution, he said, and were not attracted by populism.

More reaction is coming in from Europe's leaders, this time from the spokesman for German Chancellor Angela Merkel. 

The list of world leaders whose political careers have come to an end this year is getting longer by the day. Ah, the halcyon days in Hanover with Chancellor Angela Merkel last April.

From L to R: 

• David Cameron, UK, resigned after Brexit referendum on 24 June
• Barack Obama, USA, leaves the presidency in January 2017 after two terms
• Francois Hollande, France, decided not to seek second term in office on 1 December amid lowest presidential popularity rating in French history
• Angela Merkel - Germany's exception - is to seek a fourth term as Chancellor next autumn
• Matteo Renzi, Italy, decided to resign after 4 December referendum defeat 

Image source, Getty Images

Italian media report that PM Matteo Renzi met President Sergio Mattarella early on Monday. He is expected to return to the presidential palace later, the BBC's Julian Miglierini reports from Rome.

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Daniele Caprera, the Five Star Movement spokesperson in London, says there is "already a crisis in the EU" and believes the referendum result could mean his party is on the brink of power.  

While 59.11% of Italians in Italy itself voted against PM Matteo Renzi's reforms, Italians in the UK voted in favour.

And as Francesca Marchese explains here, more Italians came to the UK in 2015 than any other EU country.

Here is a look at how Italians voted around the world. Red represents "No", while Green is "Yes".

Mr Renzi is expected to hand in his resignation to President Sergio Mattarella after a final cabinet meeting in the afternoon.

The president may ask him to stay on at least until parliament has passed a budget bill due later this month.

In spite of the pressure from the opposition, early elections are thought to be unlikely.

Instead, the president may appoint a caretaker administration led by Mr Renzi's Democratic Party, which would carry on until an election due in the spring of 2018.

Finance Minister Pier Carlo Padoan is  favourite to succeed Mr Renzi as prime minister.

But, even if he leaves his post on Monday, Mr Renzi will not have to worry about packing his belongings, as the BBC's James Reynolds reports from Rome.

And here is James again with some facts about the presidential palace.