French President Emmanuel Macron has decided to keep Prime Minister Gabriel Attal in office after parliamentary elections left the nation facing a hung parliament.
"The President has asked Gabriel Attal to remain prime minister for the time being in order to ensure the country's stability," Macron's office said in a statement.
Attal had already flagged that he would offer his resignation, which follows French political tradition, but added he was prepared to stay in office longer as a caretaker but it was up to the president to decide.
"I will of course do my duties as long as it's needed - it cannot be otherwise on the eve of a date (the Olympics) that is so important for our country," Attal had earlier said as it became clear Macron's alliance had endured a humbling setback.
Marine Le Pen's far-right alliance was blocked from power in a surprise result in France's election. (AP PHOTO)
France faces the prospect of taxing negotiations to form a government after a surprise left-wing surge in Sunday's election blocked Marine Le Pen's quest to bring the far right to power.
The leftist New Popular Front (NFP) emerged as the dominant force in the National Assembly.
However, with no single group securing a working majority, the possibilities include the NFP forming a minority government or the building of a broad, unwieldy coalition.
The election result delivered a stinging blow to Macron and leaves the euro zone's second-largest economy in limbo, heralding a period of political instability just weeks before Paris hosts the Olympic Games.
Macron ended up with a hugely fragmented parliament, in what is set to weaken France's role in the EU and further afield, and make it hard for anyone to push through a domestic agenda.
The left won 182 seats, Macron's centrist alliance 168 and Le Pen's National Rally (RN) and allies 143, interior ministry data cited by Le Monde newspaper showed.
France Unbowed leader Jean-Luc Melenchon says the prime minister should come from the leftist bloc. (EPA PHOTO)
"According to the logic of our institutions, Emmanuel Macron should today officially invite the New Popular Front to nominate a prime minister," said Green leader Marine Tondelier, one of a number of NFP figures seen as potential candidates for the post.
"Will he or won't he? As this president is always full of surprises, we'll see," she said earlier on RTL radio.
Parties from the NFP - made up of the French Communist Party, hard-left France Unbowed, the Greens and the Socialist Party - met overnight for the first talks on how to proceed.
France Unbowed's firebrand leader Jean-Luc Melenchon said the new prime minister should hail from NFP. However, the bloc has no leader, and its parties are strongly divided over who they could select as a suitable premier.
Some prominent centrist figures, including Edouard Philippe, a former prime minister under Macron, said they were ready to work on a pact to ensure a stable government, but were not prepared to work with Melenchon's France Unbowed - a force seen by many French centrists as just as extremist as the RN.
The euro fell on Sunday after the vote projections were announced.
Marine Le Pen's National Rally has been projected to win a majority of votes but ended in third. (EPA PHOTO)
For Le Pen's RN, the result was a far cry from weeks during which opinion polls consistently projected it would win comfortably.
The left and centrist alliances co-operated after the first round of voting on June 30 by pulling scores of candidates from three-way races to build a unified anti-RN vote.
In his first reaction, RN leader Jordan Bardella, Le Pen's protege, called the co-operation between anti-RN forces a "disgraceful alliance" that he said would paralyse France.
Le Pen, who will likely be the party's candidate for the 2027 presidential election, said however Sunday's ballot, in which the RN made major gains compared with previous elections, had sown the seeds for the future.
"Our victory has been merely delayed," she said.