Britain has voted to leave the European Union, forcing the resignation of Prime Minister David Cameron and dealing the biggest blow since World War Two to the European project of forging greater unity.

Global financial markets plunged on Friday as results from a referendum defied bookmakers’ odds to show a 52-48 per cent victory for the campaign to leave a bloc Britain joined more than 40 years ago.

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The pound fell as much as 10 per cent against the dollar to touch levels last seen in 1985, on fears the decision could hit investment in the world’s fifth-largest economy, threaten London’s role as a global financial capital and usher in months of political uncertainty.

The euro slid 3 per cent.

World stocks saw more than $US2 trillion ($A2.63 trillion) wiped off their value.

Big banks took a battering, with Lloyds, Barclays and RBS falling as much as 30 per cent.

Britain’s FTSE 100 stock index recovered much of its early losses by the end of the day after the world’s main central banks offered financial backstops.

The United Kingdom itself could now break apart, with the leader of Scotland – where nearly two-thirds of voters wanted to stay in the EU – saying a new referendum on independence from the rest of Britain was “highly likely”.

An emotional Cameron, who led the “Remain” campaign to defeat, losing the gamble he took when he promised the referendum in 2013, said he would leave office by October.

“The British people have made the very clear decision to take a different path and as such I think the country requires fresh leadership to take it in this direction,” he said in a televised address outside his residence.

“I do not think it would be right for me to be the captain that steers our country to its next destination,” he added, choking back tears before walking back through 10 Downing Street’s black door with his arm around his wife Samantha.

Quitting the world’s biggest trading bloc could cost Britain access to the trade barrier-free single market and means it must seek new trade accords with countries around the world.

A poll of economists by Reuters predicted Britain was likelier than not to fall into recession within a year.

International Monetary Fund Managing Director Christine Lagarde called for “clarity” on the negotiations over the terms of Britain’s exit.

Speaking at an IMF lecture with China’s top central banker, she said hoped for “as smooth a transition as possible” for the new UK-EU relationship.

The EU, which rose out of the ashes of two world wars fascist and communist totalitarianism to unite a continent of prosperous democracies, faces economic and political damage without Britain, which has the EU’s biggest financial centre, a UN Security Council veto, a powerful army and nuclear weapons.

“It’s an explosive shock. At stake is the break up pure and simple of the union,” French Prime Minister Manuel Valls said. “Now is the time to invent another Europe.”

German Chancellor Angela Merkel, who invited the French and Italian leaders to Berlin to discuss future steps, called it a watershed for European unification.

Her foreign minister, Frank-Walter Steinmeier said the 27 countries left in the European Union should not take any revenge, but focus on security, migration and economic growth.

Cameron, in office since 2010, said it would be up to his successor to formally start the exit process.

His Conservative Party rival Boris Johnson, the former London mayor who became the most recognisable face of the Leave camp, is now widely tipped to seek his job.

MPs from the opposition Labour Party also launched a no-confidence motion to topple their leader, leftist Jeremy Corbyn, accused by opponents in the party of campaigning tepidly for its Remain stance.

The shock hits a European bloc already reeling from a euro zone debt crisis, unprecedented mass migration and confrontation with Russia over Ukraine.

The four-month campaign was among the most divisive ever waged in Britain, with accusations of lying and scare-mongering on both sides and rows over immigration which critics said at times unleashed overt racism.

The campaign revealed deep splits in British society, with the pro-Brexit side drawing support from voters who felt left behind by globalisation and blamed EU immigration for low wages.

Older voters backed Brexit; the young mainly wanted to stay in.

Risk assets were scorched as investors fled to the safety of top-rated government debt, with FTSE futures off 6 per cent and EMINI S&P 500 futures down 2.5 per cent.

“Sterling is getting smackadoodled,” said Tim Kelleher, Head of FX Institutional Sales New Zealand for ASB Bank in Auckland.

Betting firm BetFair estimated the probability of leaving as high as 74 per cent.

Traders were particularly spooked by returns from Sunderland showing a large majority for the “Leave” camp and just a narrow win for “Remain” in Newcastle.

The tremors shook all asset classes and regions.

The safe-haven yen sprang higher to stand at 103.47 per dollar, having been as low as 106.81.

That dragged the Nikkei down 3 per cent and prompted warnings from Japanese officials that excessive forex moves were undesirable.

MSCI’s broadest index of Asia-Pacific shares outside Japan slid 2 per cent while Shanghai stocks lost 0.5 per cent.

UK bank shares listed in Hong Kong tumbled on the prospect of a destabilising exit. HSBC fell 4 per cent while Standard Chartered fell 6 per cent.