Italy's Berlusconi resists pressure, for now, to stand aside

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Previously, Berlusconi's presence as an ally to Lega had prevented both parties from striking a political deal.

The anti-establishment 5-Star Movement and far-right League have made "significant steps" toward forming a government, the two parties said yesterday as Italy looked to end nine weeks of political deadlock.

Talks are under way between the anti-establishment Five Star Movement and the far-right League, which leads Italy's centre-right alliance, to form a Eurosceptic government in the eurozone's third-biggest economy.

"I cannot disguise my joy and happiness that we can finally start solving Italy's problems", Di Maio said on Facebook.

"That means we would see a run-off between the League and the 5-Star Movement, which could result in a clearer victor and an end to the political deadlock".

Negotiations have failed since the March 4 election.

President Sergio Mattarella has given the two populist forces until Thursday afternoon to decide whether they can forge a majority.

Potential premiers of a Five Star-League government include Giancarlo Giorgetti, a senior League lawmaker, League senator Giulia Bongiorno, and Five Star's Roberto Fico, speaker of the lower house, newspaper Corriere della Sera reported Thursday.

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Piccoli added that the current impasse could increase support for the populist parties.

On Monday, Mr Mattarella called on warring political leaders to support a "neutral government", declaring that there was no longer any hope for a workable political alliance and that Italy can't wait any longer for leadership. He said he should have more details later in the day.

A source in his office said the president would name the new prime minister on Wednesday or Thursday in the hope that parliament will give the nominee the necessary confidence votes to pursue a limited mandate that would expire in December.

The president added that elections over the summer would be impractical because so many Italians would be on vacation, and risky in autumn because it could jeopardise approval of the annual budget in parliament.

The scandal-ridden former prime minister said on Wednesday that he would not oppose an alliance between the League and Five Star, removing the main obstacle to the a Five Star-League tie-up. "We are going to vote in July", he wrote on Twitter.

If parliament rejects the president's pleas, then the earliest possible date for an election would be July 22, when many Italians will have gone on holiday, meaning turnout could slump.

Matteo Salvini with his coalition partners at the presidential palace.