Rishi Sunak has formally taken charge as Britain's first Indian-origin Prime Minister after an audience with King Charles III on Tuesday, a day after he was elected the new leader of the Conservative Party in a historic leadership run.

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Outgoing Prime Minister Liz Truss chaired her final Cabinet meeting at 10 Downing Street on Tuesday morning before making her way to Buckingham Palace to formally tender her resignation to the 73-year-old monarch.

Sunak then arrived at the palace for his meeting with the King, who then invited him to form a government as the UK's 57th Prime Minister and the monarch's second in just over six weeks.

The 42-year-old former Chancellor of Exchequer, a devout Hindu, is the youngest British prime minister in 210 years. He is also Britain's first Hindu Prime Minister.

Sunak, the second prime minister in as many months and the third this year, will make his first prime ministerial address on the steps of 10 Downing Street, expected to be joined by his wife

Akshata Murty and daughters Krishna and Anoushka. He is then expected to start finalising his Cabinet, with the key roles of Chancellor, Foreign Secretary and Home Secretary expected to be announced soon.

"The UK is a great country, but there is no doubt we face a profound economic challenge," said Sunak in his first address as Prime Minister elect on Monday, with reference to the economic turmoil he is inheriting following former prime minister Liz Truss' disastrous tax-cutting mini-budget last month.

"We now need stability and unity and I will make it my utmost priority to bring our party and our country together; because that is the only way we will overcome the challenges we face and build a better, more prosperous future for our children and our grandchildren. I pledge that I will serve you with integrity and humility and I will work day in day out to deliver for the British people," he said.

Sunak's victory on Diwali has resonated among the Indian diaspora groups across the UK, who have hailed it as a historic moment in British social history.

"Rishi Sunak becoming the first British Indian Prime Minister is an historic moment. This simply would not have been possible even a decade or two ago,? said Sunder Katwala, Director of British Future think tank.

But we should not underestimate this important social change. When Sunak was born in Southampton in 1980, there had been no Asian or black MPs at all in the post-war era. There were still no black or Asian Conservative MPs when he graduated from university in 2001. That Rishi Sunak is set to be Prime Minister during the coronation of King Charles III next spring tells an important story about our society, where we have come from and where we are going in the future, he said.

The Archbishop of Canterbury urged Britons to pray for Rishi Sunak as he enters No. 10 Downing Street at a turbulent time.

"At a time of great difficulty and uncertainty for this country, please join me in praying for Rishi Sunak as he takes on the responsibilities of leadership," Justin Welby wrote on Twitter.

"May he, and all leaders of all parties, work across divides to bring unity and offer stability for those who need it most," he said.

Sunak's victory in the Tory leadership race came at the end of a dramatic few days in Westminster since Liz Truss resigned last Thursday in the wake of a disastrous tax-cutting mini-budget and several policy U-turns.

Former prime minister Boris Johnson ruling himself out from the contest over the weekend and Leader of the Commons Penny Mordaunt conceding defeat just moments before the shortlisting deadline on Monday paved the way for a remarkable political comeback for Sunak having lost the Tory membership vote to Truss just last month.

However, his popularity as the frontrunner among his party colleagues has replicated yet again as more than half the Tory MPs came out publicly in his support. He now faces the enormous challenge of steering the UK economy through massive inflationary turbulence and also uniting the different wings of a divided Conservative Party.