Italy's President Giorgio Napolitano started consultations on Sunday with parliamentary and party leaders to agree on an emergency government after Prime Minister Silvio Berlusconi resigned on Saturday.
Berlusconi, 75, Italy's longest-serving prime minister after World War II and the third-richest man in the country, said earlier this week he would resign after the parliament finally approved a package of tough austerity measures to tackle the country's spiraling debt crisis.
After the consultations, Napolitano is expected to ask former European Commissioner Mario Monti to form a caretaker government, which will be charged with the task of implementing austerity measures to stabilize finances in the eurozone's third largest economy.
Earlier this week, the yield on Italy's benchmark 10-year sovereign bonds rose to above the 7 percent level that triggered bailout requests from Portugal, Ireland and Greece.
At that level, debt repayment is likely to exceed the level at which Italy can afford to repay it. Italy's state debt stands at about 1.9 trillion euros ($2.6 trillion). Many analysts suspect the county's debt problem is simply too big to bail out.
