Theresa May will be prime minister and installed in Number Ten Downing Street by the end of Wednesday, David Cameron has announced.

Towards the end of another day of rapidly moving events at Westminster after May's former rival Andrea Leadsom withdrew from the race to succeed Cameron, the outgoing prime minister said she had made "absolutely the right decision to stand aside".

Speaking outside Number Ten, Cameron added that he was "delighted" that May will succeed him. "We are not going to have a prolonged leadership election campaign. I think Andrea Leadsom made absolutely the right decision to stand aside. It is clear Theresa May has the overwhelming support of the Conservative parliamentary party. I'm also delighted that Theresa May will be the next prime minister. She is strong, she is competent, she's more than able to provide the leadership the country is going to need in the years ahead and she will have my full support."

There had been speculation that May would not be installed as prime minister until later in the week because the Queen, reportedly at Balmoral, Scotland was not expected back in London until Thursday and Cameron could not leave office without consulting with her. However this afternoon it was confirmed that the Queen will be returning to London tomorrow, when Cameron will chair his last Cabinet meeting before attending his final session of prime minister's questions on Wednesday. After that, he will formally resign before the Queen and move out of Downing Street.

"Obviously with these changes we now don't need to have a prolonged period of transition," said Cameron, referring to the nine-week membership stage of the Tory leadership contest which has now been averted by Leadsom's decision. "And so tomorrow I will chair my last Cabinet meeting. On Wednesday I will attend the House of Commons for prime minister's questions (PMQs). And then after that I expect to go to the Palace and offer my resignation, so we will have a new prime minister in that building behind me by Wednesday evening."

Cameron is expected on Wednesday to be warmly greeted by MPs, who gave Tony Blair a standing ovation after his last PMQs in 2007.

Both Tim Farron, the Lib Dem leader, and Jeremy Corbyn, the embattled Labour leader, today called for an early general election following May's coronation. Meanwhile, in an event largely overshadowed by developments in the Tory party, the former shadow business secretary Angela Eagle has formally challenged Corbyn for the Labour leadership.