Draghi resigns after three coalition parties withdrew support from national unity government.
Italy has been plunged into political chaos after prime minister Mario Draghi resigned following a boycott in a government vote of confidence by three key coalition parties.
Draghi handed his resignation to President Sergio Mattarella at the Quirinal Palace on Thursday morning, in what Italian newspaper La Stampa has termed a "day of shame" for Italy.
Mattarella has asked Draghi to remain in office in a caretaker role, with snap elections expected in early October, ahead of the scheduled general election next spring.
— Quirinale (@Quirinale) July 21, 2022
On Wednesday the rightwing Lega and centre-right Forza Italia joined the populist MoVimento 5 Stelle (M5S) in abstaining from the crucial vote in the national unity government headed by the former European Central Bank chief.
Draghi had already sought to resign last week after the M5S, led by former premier Giuseppe Conte, failed to back a €26 billion cost-of-living package and snubbed a confidence vote amid claims that the party's proposals were being ignored.
However Mattarella refused to accept Draghi's resignation and instead tasked the premier with trying to avert the political crisis.
In the days that followed, a major campaign got underway calling on Draghi to stay in office, with business leaders and more than 1,500 mayors urging him to rethink his decision.
Speaking in parliament on Wednesday, Draghi called for a "new pact of trust, sincere and concrete, like the one that has allowed us to change the country for the better", appealing to parties and lawmakers "to rebuild this pact".
However the Lega, led by Matteo Salvini, and Forza Italia, the party of former premier Silvio Berlusconi, said they were unwilling to support a government with the M5S, calling on Draghi to form a new administration without Conte's party.
On Wednesday night Conte and Salvini engaged in a blame game over who was responsible for the crisis.
Conte accused Draghi, 74, of a "contemptuous attitude", claiming the M5S had received "insults" and had become "the target of a political attack".
Salvini said the crisis was the result of the "madness" of the M5S and the "power games" of the centre-left Partito Democratico (PD), a coalition partner in Draghi's administration.
PD leader and ex-prime minister Enrico Letta wrote on Twitter on Wednesday: "In this day of madness, the parliament decided to move against Italy", while another former PD premier Paolo Gentiloni warned that the country could be sailing into a "perfect storm".
The departure of Draghi after 18 months in power comes as Italy prepares to receive around €200 billion in EU aid, amid rising inflation and an energy crisis driven by Russia's war in Ukraine.
Draghi's broad coalition, formed after the collapse of Conte's second executive, had the support of all major parties in parliament with the exception of the right-wing Fratelli d'Italia (FdI) which is leading in opinion polls.
Analysts predict that a snap election would be won easily by a rightist alliance led by Giorgia Meloni's FdI together with the Lega and Forza Italia.