President Sergio Mattarella made clear that only a government solid enough to win the required confidence vote in Parliament would be considered an acceptable way out of the knotty, weeks-long political crisis.
Fast-rising nationalist leader Matteo Salvini yanked support for the governing 14-month-old populist coalition in a bid to come to power himself in fresh elections.
Mattarella, who is head of state, said he'll start a fresh round of talks with party leaders on Tuesday so he can "reach my conclusions and take the necessary decisions."
He urged swiftness.
"Political and economic uncertainties, on an international level, require it," he said, also citing the European Union's new leadership taking the helm this fall.
Mattarella didn't say which parties had told him they were trying to reach a coalition deal.
But Italian news reports said the negotiations involved arch-rivals: the opposition Democrats and the 5-Star Movement, which was the main partner in the now-caretaker government.
The Democrats confirmed that negotiations between the heads of the two parties were indeed underway, even though the 5-Stars were shying away from confirming that.
Any such deal, if successful, could foil Deputy Premier Salvini, the euroskeptic leader of the right-wing League, in his bid to force early elections and become premier.
He wants to capitalize on his soaring popularity, including in May's European Parliament vote.
Premier Giuseppe Conte resigned on Tuesday after Salvini withdrew political support earlier this month. Since then, at Mattarella's request, Conte is serving in a caretaker role.
To call new elections "is a decision not to be taken lightly, after more than a year of the legislature's life," Mattarella said. Parliament's full term is five years, but in the volatile world of Italian politics rarely lasts that.
In rapid-fire order, the three main political parties pitched possible deals to rivals earlier Thursday.
Parliament's largest opposition party, the Democrats, signaled a willingness to work with the 5-Stars to attempt to cobble together a pro-Europe coalition to counter Salvini and avoid an early election.
Salvini, who also serves as Italy's anti-migrant interior minister, kept up his press for early elections.
But as a backstop against any deal between the Democrats and 5-Stars, Salvini dangled the possibility of a Cabinet overhaul that keeps his League party in a ruling coalition with the 5-Stars.
"If someone tells me 'Let's improve the team, let's improve the aim,' I'm a concrete man. I don't hold grudges," Salvini said.
Barely an hour later, 5-Star leader Luigi Di Maio, like Salvini a deputy premier, said that while "the most convenient path is to head to a vote," he'd be open to a political deal to keep the current legislature alive. But he didn't say with whom.
Earlier, Nicola Zingaretti, who leads the center-left Democrats, lobbied for the same solution as Di Maio: a coalition that could nail down durable, broad backing in Parliament.
"Not a government at any cost," Zingaretti told reporters at the palace. "We need a government that changes direction, an alternative to the right."
Creating a viable replacement for Conte's collapsed government will prove a Herculean task for anyone.
Both the Democrats and the 5-Stars have been weakened by infighting — and over a year ago they failed to agree to a coalition deal after the 2018 election that ultimately brought Conte's now-caretaker government to power.
Zingaretti said any new government must pledge to protect the "pro-European vocation" of Italy. The 5-Stars, however, frequently depict European Union policies as infringing on Italy's autonomy.
Mammoth state spending under Conte's tenure, reflecting populist promises to voters by both the 5-Stars and the League, means whoever governs Italy for the rest of this year must slash tens of billions of euros from the proposed 2020 budget to avoid triggering higher sales taxes and other painful measures which could alienate voters.
Salvini with his "Italians first" agenda has openly challenged the EU's financial rules for the 19 nations including Italy who use the shared euro currency.
Former center-right leader Premier Silvio Berlusconi warned against any "improvised majority that exists only in Parliament and not in the country."
The media mogul described his Forza Italia party — should it return to power in a right-wing government — as Italy's best guarantee of having leaders that would back pro-European policies and make sure Italy does not abandon the euro currency.
Frances D'Emilio is on twitter at www.twitter.com/fdemilio .