"I want to wish every success to the new PM and the new government. I will support this effort with all my strength," Papandreou said in a solemn televised address to the nation, without naming the next leader.
But the outgoing PM said his successor would be an "institutional" choice as reports suggested 60-year-old parliament chief Philippos Petsalnikos, a long-term socialist member and former minister, would be given the nod.
"This is a historic day, the fact that several political powers are able to co-operate," Papandreou later told head of state President Carolos Papoulias ahead of a meeting with other parties to finalise the new administration.
"It opens a new page in our country's history," he said.
Papoulias has asked to see Papandreou, the head of the opposition and leader of the conservative New Democracy party Antonis Samaras, and the leader of the small nationalist party Laos, George Karatzaferis.
The other two parties in Greece's parliament -- the KKE Communists and the Syriza leftists -- have refused to participate in the talks, arguing that the new government will change nothing in tough austerity policies followed for the past two years under close supervision from Brussels and the IMF.
The incoming team must quickly ratify an EU bailout deal which Greece's European peers say is a precondition for the release of loan funds to prevent bankruptcy in the Greek economy whose reserves will run out in mid-December.
Copyright AFP (Agence France-Presse), 2011