The rightwing Brothers of Italy Party (FdI) may form a coalition government with the far-right League party and the populist Five-Star Movement and FdI's leader Giorgio Meloni could become defence minister - if League chief Matteo Salvini agrees to give up his eurosceptic pick of finance minister, League sources told Adnkronos on Thursday.
Salvini met Meloni - his conservative ally - at the Italian parliament in Rome on Thursday, according to FdI lawmaker Ignazio La Russia, who took part in the meeting.
Salvini was also due to hold talks with Five-Star leader Luigi Di Maio and with their nominee premier, law professor Giuseppe Conte, to agree on moving the populist economy minister designate Paolo Savona to another cabinet job, the League party sources told Adnkronos.
It was however unclear if 81-year-old Savona is willing to accept another ministerial post, the sources said.
Talks over the nascent populist coalition government collapsed on Sunday when in a rare move, Italy's pro-European president Sergio Mattarella refused to endorse Savona as finance minister, citing concerns from investors at home and abroad.
Mattarella signalled he was ready to install a technocrat cabinet if a deal could not be reached, but in a bid to stave off a snap election in July has decided to give Salvini and Di Maio more time to form a government.
Italy has been in political limbo since the inconclusive 4 March national election in which populist parties made strong gains but no party or bloc won an outright parliamentary majority.
Several rounds of talks with Italy's party leaders since the March polls collapsed amid a seemingly irreconcilable mesh of demands.