Theresa May is expected to name the rest of her Cabinet on Saturday after the Conservatives failed to win an overall majority in the General Election.
The Prime Minister announced she will form a new government with support from the Democratic Unionist Party after her gamble on a snap election dramatically backfired.
After seeking permission from the Queen at Buckingham Palace, Mrs May announced the new alliance on the steps of Downing Street.
"This Government will guide the country through the crucial Brexit talks that begin in just 10 days and deliver on the will of the British people by taking the United Kingdom out of the European Union," she said.
Video report by ITV News Political Editor Robert Peston
"It will work to keep our nation safe and secure by delivering the change that I set out following the appalling attacks in Manchester and London."
The Tories remain the largest party but shed 12 MPs - leaving the party short of commanding the House of Commons less than two weeks before Brexit negotiations are scheduled to begin.
Downing Street had earlier confirmed that Mrs May would not step down as Conservative Party leader following the shock general election outcome of a hung parliament.
Mrs May told ITV News she was sorry for her colleagues who had lost their seats.
"I obviously wanted a different result last night and I'm sorry for all those colleagues who lost their seats who didn't deserve to lose," she said.
"And of course I'll reflect on what happened."
She then confirmed the top five members of her Cabinet will remain the same as before the election.
Philip Hammond, Amber Rudd, Boris Johnson, Michael Fallon, and David Davis have all been retained.
The results delivered a sizeable gain for Labour back to a level that is higher than when the party lost power in 2010.
Labour leader Jeremy Corbyn, who has called on Mrs May to stand down, said his party is ready to "serve the country" though added it would make no deals or pacts.
Mr Corbyn, buoyed by a night of unexpected gains, said voters had rejected the prime minister's demand for a Brexit mandate and said the results were "enough (for Mrs May) to go".
A celebratory Mr Corbyn said "politics has changed and it isn't going back into the box it was before" during his constituency victory speech.
He added: "Whatever the final result, our positive campaign has changed politics for the better."
Paul Nuttall resigned as Ukip leader after his party failed to gain a single seat in Westminster.
"I'm standing down today as the leader of UKIP with immediate effect," he said. "This will allow the party to have a new leader in place by the conference in September."
He said the shock election result represented a "temporary" return to two-party politics.
Liberal Democrat leader Tim Farron also called on Mrs May to resign on Friday afternoon, telling reporters the prime minister had called an election from "sheer arrogance and vanity" while "expecting it to be a coronation".
He said plans for Brexit should be put on hold while the new government reviews its priorities, as he ruled out a deal to join forces with the Tories.
Following her personal win in Maidenhead, Mrs May said if her party secured the most seats and votes it would be "incumbent" on her party would deliver "stability" for the country.
Former chancellors George Osborne and Ed Balls analysed the election for ITV News overnight, with Evening Standard editor Mr Osborne calling the hung parliament "completely catastrophic" for the Tories and Mrs May in particular.
"Clearly if she's got a worse result than two years ago and is almost unable to form a government then she, I doubt, will survive in the long term as Conservative party leader," Mr Osborne said.
What happens next?
Mrs May has been granted permission from the Queen to form a new government with the Democratic Unionist Party.
DUP, the largest unionist political party in Northern Ireland, won 10 seats and are holding first talks to discuss a possible deal with the Conservatives - but sources said any arrangement "will come at a price".
Leader Arlene Foster described her party's election result as the "best ever".
Shadow chancellor John McDonnell, who told ITV News his party had been rewarded for Mr Corbyn's "positive" campaign, contradicted his party leader's vow that Labour would not do any "deals or pacts".
He told ITV's Good Morning Britain that Labour would look to form a minority government with the support of other parties.
He challenged the SNP, Lib Dems and returning Green leader Caroline Lucas to join forces with Labour in the Commons.
Shadow foreign secretary Emily Thornberry also told ITV News that Labour was "prepared to be the next government" if the Conservatives failed to secure a majority.
Nicola Sturgeon appealed for MPs from all parties to form a Brexit strategy that will benefit the "whole of the UK".
"I'm appealing to MPs from all parties to join together to keep the UK and Scotland in the European single market," she said on Friday afternoon.
Can any party govern? ITV News election analyst Jane Green explains below
Shocks of the night:
Government minister Jane Ellison lost her Battersea seat in a night of shocks that also saw former deputy prime minister Nick Clegg lose his Sheffield Hallam seat and the SNP's former leader Alex Salmond and Westminster leader Angus Robertson both defeated.
Home Secretary Amber Rudd faced a re-count before narrowly holding on to her Hastings and Rye seat by only a few hundred votes.
How the markets reacted:
ITV News Business Editor Joel Hills noted the dramatic impact of the poll in the markets, which had anticipated the Conservatives would secure a healthy majority.
Sterling fell over 1.5% to 1.27 US dollars and over 1% to 1.13 euros following the 10pm exit poll.
Britons voted in the snap general election in their highest numbers in 25 years.