Erdogan won the vote to be Turkey's first elected head of state on August 10, replacing Gul with whom he founded Turkey's ruling Islamic-rooted Justice and Development Party (AKP).
Political commentators had claimed that Gul had been frozen out of a possible return to government by Erdogan and his supporters as the president-elect further tightens his grip on power.
"As far I understand, Ahmet Davutoglu will be the next head of government," the outgoing president told the media at his last reception at the presidential palace in Ankara yesterday.
Erdogan's first-round victory in the presidential poll cemented his status as the most dominant figure in Turkish politics since Ataturk.
He is set to officially name his successor tomorrow.
Davutoglu, an Erdogan loyalist, is unlikely to challenge the president-elect's vow to be a powerful head of state.
The new premier will first have to be elected party leader at a special AKP congress called for August 27, before taking office and forming a government.
While he said he does not intend to return to frontline politics, he repeated that "it is natural to return to my party".
Gul founded the AKP with Erdogan in 2002, the year before it won the first of its three general election victories, before cutting ties with the party to become president in 2007, as the constitution demanded.
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