President Traian Basescu's decision followed the victory of Prime Minister Victor Ponta's center-left governing alliance in the Dec. 9 parliamentary vote. Ponta, whose coalition won 68 percent of the seats in Parliament, has 10 days to appoint a new Cabinet that is expected to be approved by lawmakers.
Ponta, who is expected to name his Cabinet on Tuesday, said he will present his government to lawmakers for approval on Friday. He has already announced the names of his three deputy prime ministers.
The enmity between Ponta and Basescu has poisoned Romania's political atmosphere for months and came to a head last summer when Ponta tried unsuccessfully to impeach Basescu, a 61-year-old former ship captain. Romanians voted overwhelmingly to impeach Basescu, fed up with the combative leader who had been in power since 2004, but the bid failed because of low voter turnout.
Before the election, Basescu had said he was reluctant to reappoint Ponta, calling him "a compulsive liar."
European Union officials have voiced concern that the feud would bring more political turmoil, harming Romania's reputation and deterring much-needed foreign investment.
The EU and the United States criticized the Romanian government this summer for failing to respect the rule of law during the impeachment process. Ponta has
Romania, one of European Union's 27 nations, has been rocked this year by political turmoil and huge anti-government protests against tough austerity measures aimed at dealing with the country's debt. The struggling government had to take out a (EURO)20 billion ($26 billion) bailout loan from the International Monetary Fund and the World Bank in 2009 to help pay pensions and salaries.
Ponta is Romania's third prime minister this year.