Former IMF official Carlo Cottarelli nominated as Italian Prime Minister

President Sergio Matarella called Cottarelli to the the Quirinale, the Italian Presidential Palace, after previous attempts by Italy's populist parties to form a government failed.

"I am very honoured and I will do my best," Cotarelli told journalists outside the Quirinale, the Italian Presidential Palace.

Cottarelli said Mattarella asked him to present a program to Parliament to run Italy until new elections are held early next year.

"If my government wins the confidence vote, there will be new elections at the beginning of 2019 after approving the next budget," Cotarelli said.

However, he will need to win a parliamentary confidence vote, which appears unlikely, meaning snap elections could be held as early as August.

Cottarelli confirmed he would not run in any new elections.

On Sunday Matarella said he will appoint a technocratic, or non-political, Prime Minster after the designated choice declined to form a government.

Giuseppe Conte, a law professor and political novice, was put forward by the country's populist parties that won most votes in an election in March last week to do the job.

But Mattarella told reporters after a meeting Sunday that he objected to Conte's choice for the economic ministry.

He said Conte's candidate, Paolo Savona, was unacceptable because the appointment would alarm investors and have dangerous consequences for Italy's outstanding government debt.

Mattarella said the country is heading for new elections.

"Nobody can say that I have put obstacles to the so-called government of the change," he said, but, "I need to take care of the savings of the Italian people."

Most of Italy's debt is held by Italian citizens in the form of pension and savings bonds.

The two largest parties to emerge from the March election, the rightwing League and the anti-establishment Five Star movement are opposed to the euro.

Novice Conte emerged last week

Five Star leader Luigi Di Maio and Matteo Salvini, the League leader, have been locked in talks with Matarella since the vote.

During the negotiations, the populists ditched some of their most incendiary campaign vows, such as calling for a referendum on whether Italy should abandon the euro or leave the European Union.

Instead they promised a spending and tax-cutting binge that has rattled investors and could contain the seeds of a new European crisis.

A populist government in Rome could make it more difficult for European Union leaders such as French President Emmanuel Macron and German Chancellor Angela Merkel to push further EU political and economic integration.