A meeting on Tuesday in Rome between the far-right League party leader Matteo Salvini and populist Five-Star Movement head Luigi Di Maio was "calm and constructive" the League said in a statement.
Salvini and Di Maio's 90-minute meeting took place "in a canteen in central Rome and lasted about an hour and a half," said the statement.
"Things are moving forward and discussions are centred on the final details ahead of a meeting with President (Sergio) Mattarella," the statement added, referring to Italy's head of state.
"I met Salvini. We are trying to form a government," Di Maio told reporters as he arrived at the Italian lower house of parliament.
Di Maio and Salvini on Monday unveiled their pick of a premier to lead their nascent government - little known Italian law professor and political novice Giuseppe Conte - and on Tuesday held a meeting with the academic.
It is understood Mattarella has significant reservations about the direction of the planned populist government and on Tuesday he convened the leaders of Italy's two houses of parliament to meet with him.
The League and Five-Star issued their joint coalition plans last week which include a 'flat tax', a guaranteed minimum income and cancelling sanctions against Russia.
The common agenda rejects European Union austerity and wants to renegotiate Italy's debt, putting Italy on a collision course with Brussels.
The two eurosceptic parties won over half the votes in Italy's inconclusive 4 March national polls that led to a hung parliament.
Several previous rounds of talks with Italy's political leaders have collapsed amid a mesh of seemingly irreconcilable demands.
Five-Star is the biggest party while the centre-right alliance, led by Salvini, is the largest political bloc.
