The populist Five-Star Movement and the far-right League have made "significant progress" in talks over the past 24 hours on a coalition government, Five-Star leader Luigi Di Maio and League leader Matteo Salvini said in a written statement on Thursday.
"Significant progress has been made on a cabinet and on appointing a prime minister amid constructive cooperation between the two sides," the statement said.
"The goal is to finalise everything is as short time as possible to give answers and a democratic government to Italy," the statement added.
The statement followed a meeting at the Italian parliament between Di Maio - who heads Italy's largest party - and Salvini - who leads the biggest political bloc.
Italy's president Sergio Mattarella on Wednesday gave the pair a further day of last-ditch talks on forming a coalition after two months of political deadlock since Italy's inconclusive 4 March election.
The main obstacle to a Five-Star-centre-right tie-up has been Salvini's refusal to break with his veteran conservative ally Silvio Berlusconi, leader of the Forza Italia party who has a tax fraud conviction and is on trial for bribery.
But late on Wednesday Berlusconi yielded to pressure, including from his own lawmakers, and pledged that he is open to Five-Star and the League parties governing together.
Mattarella has given Di Maio and Salvini until Thursday afternoon to agree on forming a majority government.
