Italy is mired in fresh political turmoil, with the president facing impeachment calls after he vetoed a choice for finance minister.
In a rare move, President Sergio Mattarella said he could not appoint the Eurosceptic Paolo Savona, citing concerns by investors.
The decision ended a bid by Italy's two populist parties to form a coalition.
Mr Mattarella may now appoint a stop-gap prime minster with early elections looking increasingly likely.
He has summoned Carlo Cottarelli, a former executive director of the International Monetary Fund, who could form an interim administration.
Italy, the eurozone's fourth-biggest economy, has been without a government since elections in March because no political group can form a majority.
The Five Star Party had been trying to form a government with another populist party, the right-wing League.
The BBC's James Reynolds in Rome says a temporary prime minister is unlikely to last long and early elections may have to be called.
There is now a real argument between the president and the populists about Italy's position in the EU, he adds.
A political novice, Giuseppe Conte, was proposed by the two populist parties as prime minister in an attempt to break Italy's 11-week political deadlock, reports the Reuter's news agency.
He went to meet Mr Mattarella to put forward choices for his cabinet but the president vetoed Mr Savona as finance minister, citing his fierce opposition to membership of the eurozone.
