Mr Manmohan Singh has been appointed Prime Minister of India. President Abdul Kalam asked him to form a government this afternoon after he was earlier appointed head of the Congress party's parliamentary group.
The party's leader, Italian-born Ms Sonia Gandhi, refused to put herself forward for the position because of opposition complaints about her country of birth.
A date for the swearing in of the new administration had yet to be decided.
After a shock victory for Congress it was expected the Italian-born wife of assassinated former prime minister Mr Rajiv Gandhi would assume the premiership.
But despite efforts by senior figures in her party and strong public support Ms Gandhi said she did not want the controversy over her place of birth to inhibit her party's governance.
Congress became the largest party in the Indian parliament after they defied predictions to defeat the Hindu nationalist-led Bharatiya Janata Party over three weeks of voting.
The result confirmed on Sunday, left Congress short of an overall majority but left-wing parties had indicated they were willing to supprt Ms Gandhi as the head of a coalition administration.
The unassuming Mr Singh emerged after as Congress's preferred candidate after a closed-door meeting today.
He is ceredited with launching India's free market reforms more than a decade ago and has been front-runner to lead the government after Ms Gandhi - heir to the Nehru-Gandhi governing dynasty - yesterday indicated she would step aside to prevent the party being embroiled in a debate about her nationality.
The scholarly, 71-year-old commands respect for his integrity and intellect but he will need sharp political skills to manage senior party figures and disparate allies with their competing demands.