ROME - Italy's president is due to begin a fresh round of talks with discordant political parties on Tuesday aimed at finding a new coalition government and ending a political crisis sparked by the collapse of the ruling populist alliance.

President Sergio Mattarella is tasked with charting a path out of the impasse in the eurozone's third largest economy, after the partnership between the anti-establishment Five Star Movement (M5S) and the far-right League disintegrated this month and the prime minister resigned.

He has given the parties until Monday night to come to an agreement, according to reports, but if no solid majority emerges he will call an early election for November 10 -- less than two years after the last parliamentary vote.

Hardline Interior Minister Matteo Salvini sparked the crisis by pulling the plug on the governing coalition earlier this month, leading to the resignation on Tuesday of Prime Minister Giuseppe Conte.

M5S, which is the largest party in parliament but has hemorrhaged support during its fractious time in power with Salvini's League, has indicated it is open to an alliance with the center-left Democratic Party (PD) instead.

That would be a sharp reversal of relations after years of vicious arguments.

But talks between the two appear to be going well and PD leader Nicola Zingaretti on Saturday said that on finding shared policy goals, "we are open and available for all types of discussion".

"We continue to work to open a new political season," he added.

Mattarella, whose meetings with parties may extend into Wednesday, has said any new coalition must have an agreed platform that could pass parliament, after months of political clashes between M5S and the League over several high profile policies.

Both parties agree on the idea of slashing the number of lawmakers in parliament from 950 to around 600, as well as environmental protection and economic policies designed to help the weakest in society.

Analysts see a new coalition as a realistic solution to the crisis.

"In terms of the parliament, it is possible. They have enough seats (to secure a majority). For (policy) agreements too," said Emiliana De Blasio, professor of political innovation at Luiss University in Rome.

"I think there is a good chance we will have a new government in September," she told AFP.

The clock is ticking to ease the political turmoil, with Italy under pressure to approve a budget in the next few months.

If it fails it could face an automatic rise in value-added tax that would hit the least well-off families the hardest and likely plunge the country's already strained economy into recession. -AFP