Ms Truss confirmed she was standing down after meeting with the Chair of the 1922 Committee, Graham Brady, who made clear she could not continue.
It follows a brutal day for the Prime Minister on Wednesday, where she lost her Home Secretary, a close aide, more than 30 MPs defied the whip and her whips tried to resign.
he is set to become the shortest serving Prime Minister in history after she battled an open revolt from Conservatives demanding her departure.
Speaking from a lectern in Downing Street, Ms Truss said she had told the King she was resigning as the leader of the Conservative Party as she recognised she “cannot deliver the mandate” which Tory members gave her little over six weeks ago.
She said: “I came into office at a time of great economic and international instability.
“Families and businesses were worried about how to pay their bills.
"Putin’s illegal war in Ukraine threatens the security of our whole continent.
“And our country had been held back for too long by low economic growth.
“I was elected by the Conservative Party with a mandate to change this.
“We delivered on energy bills and on cutting national insurance.
“And we set out a vision for a low tax, high growth economy – that would take advantage of the freedoms of Brexit.
“I recognise though, given the situation, I cannot deliver the mandate on which I was elected by the Conservative Party.
“I have therefore spoken to His Majesty The King to notify him that I am resigning as Leader of the Conservative Party.”
There will now be a leadership election to be completed within the next week, which Sir Graham confirmed would involve party members.
The leader of the Commons Penny Mordaunt has already confirmed her own plans to run, while Jeremy Hunt has ruled himself out.
Rishi Sunak is the bookies favourite, and many expect the race to be between him and Ms Mordaunt.
It comes just a little over 24 hours after Ms Truss told MPs she was a “fighter, not a quitter”.
Sir Keir Starmer claimed the Tory party no longer “has a mandate to govern”.
He said: “After 12 years of Tory failure, the British people deserve so much better than this revolving door of chaos. In the last few years, the Tories have set record-high taxation, trashed our institutions and created a cost-of-living crisis. Now, they have crashed the economy so badly that people are facing £500 a month extra on their mortgages. The damage they have done will take years to fix.
“Each one of these crises was made in Downing Street but paid for by the British public. Each one has left our country weaker and worse off.
“The Tories cannot respond to their latest shambles by yet again simply clicking their fingers and shuffling the people at the top without the consent of the British people. They do not have a mandate to put the country through yet another experiment; Britain is not their personal fiefdom to run how they wish.
“The British public deserve a proper say on the country's future. They must have the chance to compare the Tories’ chaos with Labour’s plans to sort out their mess, grow the economy for working people and rebuild the country for a fairer, greener future. We must have a chance at a fresh start. We need a general election - now.”
SNP Westminster Leader Ian Blackford MP said: "It was inevitable Liz Truss would have to go after the damage she's inflicted - but merely swapping leaders of a broken Tory government is not enough. There must now be a general election - people will accept nothing less.
"The UK is in a state of constant crisis and long-term decline. With all the Westminster parties signed up to the economic pain of a hard Brexit and austerity cuts, it is clear independence is the only way to keep Scotland safe and escape the chaos of Westminster control for good."