Michael Martin has said he will step down as Speaker on June 21, setting in train the process for choosing a successor.
Martin, who became Speaker in 2000, will step down as an MP on the same day, prompting a by-election in his Glasgow North East constituency.
His confirmation came after a growing number of MPs backed a motion of no confidence in his leadership.
Prime minister Gordon Brown, Conservative leader David Cameron and Liberal Democrat leader Nick Clegg were in the chamber to hear the news.
In a short statement, the Speaker said: "Since I came to this House 30 years ago, I have always felt that the House is at its best when it is united.
"In order that unity can be maintained, I have decided that I will relinquish the office of Speaker on Sunday June 21. This will allow the House to proceed to elect a new Speaker on Monday June 22.
"That is all I have to say on this matter."
His comments appeared to confirm suggestions that without the support of all MPs, he was unable to continue in his post.
As the row over MPs' expenses claimed its latest and most high-profile scalp to date, attention began to focus on Martin's successor.
Labour backbencher Frank Field and Conservative MP Sir George Young are amongst the candidates tipped to become the next Speaker.
Appearing for Foreign Office questions immediately after the statement, David Miliband said MPs would pay their tributes to him "at a later date".
Despite the announcement, Martin will proceed with plans to hold a meeting of party leaders at 4.00pm on Tuesday, in the hope that further reforms to the system of MPs' expenses can be agreed.
The announcement came as the Metropolitan Police confirmed that they were rejecting the Speaker's call to investigate the source of the leak of the expenses information.
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