Iraq's president, Fouad Masoum, named a new prime minister to replace Nuri al-Maliki, asking him to form a broad government, Reuters news agency said on Monday.
The reports added that it still remains unclear whether al-Maliki would bow to pressure from Iran and the US and agree to step aside, less than 24 hours after he had threatened to submit an official complaint against Masoum.
Maliki, whose Shiite-dominated coalition won the most seats in the April elections, had accused Masoum of committing "a clear constitutional violation" by not allowing him to remain in charge for a third term.
Earlier on Monday, US Secretary of State John Kerry had withdrawn support from Iraq's now former prime minister, claiming Washington was firmly behind President Masoum and urged Maliki not to hinder political process.
"We stand absolutely, squarely behind President Fouad Masoum," Kerry said.
"He has the responsibility for upholding the constitution of Iraq, he is the elected president, at this moment Iraq has clearly made a statement that they are looking for change.
"The government formation process is critical in terms of sustaining stability and calm in Iraq and our hope is that Mr. Maliki will not stir those waters," continued the US Secretary of State.
"There will be little international support of any kind whatsoever for anything that deviates from the legitimate constitution process that is in place and being worked on now."
Maliki was blamed by officials in Baghdad, Washington and Teheran for forcing the alienated Sunni minority into revolt and militias loyal to the prime minister were deployed through the streets of the Iraq capital on Monday.
Enter the scene al-Abadi
The new prime minister, Haider al-Abadi, has been asked by president Masoum to "form a broader-based government" over the next couple of weeks and has urged national unity against the "barbaric" Islamic State (IS) whose forces have swept through northern Iraq.
"We all have to cooperate to stand against this terrorist campaign launched on Iraq and to stop all terrorist groups," al-Abadi said.
Maliki did not comment directly on the naming of al-Abadi but his son-in-law, Hussein al-Maliki, said they "will not stay silent."
"The nomination is illegal and a breach of the constitution. We will go to the federal court to object," he said.
Meanwhile, the US and members of the European Union are exploring their options for delivering arms to the Kurdish forces in the north of the country, known as Peshmerga, who in the past had distanced themselves from Maliki over the division of oil resources.
Kurdish fighters were able to regain portions of territory in northern Iraq in the wake of US airstrikes which hindered the progress of IS militants, but at least 15,000 civilians are still trapped on Mount Sinjar, after fleeing the Jihaddist militants.