Czech Prime Minister Stanislav Gross resigned today, ending months of political uncertainty after a housing scandal tore apart his government less than a year after he took power.
Mr Gross, Europe's youngest leader at 35, stepped down as part of a deal reached last week that will see his former three-party coalition government re-form under Regional Development Minister Jiri Paroubek.
Analysts said a solution to the row would be welcomed by markets which had feared the crisis could drag on through the summer.
However, Mr Paroubek's leftist credentials have raised some concerns over the pace and direction of economic reforms needed as the country aims to adopt the euro by the end of the decade.
Mr Gross, a member of the leftist Social Democrats, has denied any wrongdoing in the financing of a luxury Prague flat six years ago, but was forced out by the Christian Democrats, who demanded he step down as a condition of returning to the government after leaving several weeks ago.
Under the deal, Mr Gross's Social Democrat colleague Mr Paroubek will form a new government with the same coalition partners as Gross - the centrist Christian Democrats and the rightist Freedom Union - with 101 seats in the 200-seat lower house.
Mr Gross took over as prime minister last August after Vladimir Spidla resigned following the government's poor showing in European parliamentary elections.
He then re-formed the same coalition as Mr Spidla and was determined to hang on to power in part because his party refused to let a junior governing partner dictate the country's leader.