Italy's center-left leader Pier Luigi Bersani said on Sunday he would seek the backing of parliament for his policies on creating jobs and fighting corruption in the absence of enough support to form a government.
Stalemate after a deadlocked election in February and the threat of months of political instability has triggered alarm across Europe and warnings that Italy cannot afford to delay urgently needed reforms to boost its sickly economy.
President Giorgio Napolitano is due to begin consultations with political leaders on Wednesday to see if there is any chance of establishing a government.
Bersani, leader of the center-left Democratic Party (PD), won control of the lower house but fell short in the Senate leaving him dependent on the support of his rivals if he is to form a government.
He said he would tell Napolitano he would not try to reach any set deals in advance but would present a set of proposals to parliament based on attacking corruption and creating jobs.
"The path is very, very narrow. I think I can say that other paths would turn out to be even narrower," he said.
If no understanding that would allow a government to be formed can be reached, Italy faces the prospect of a return to the polls, possibly as soon as June, although Bersani said he hoped that would not be necessary.
Bersani was successful on Saturday in getting his candidates elected as speakers of the lower house and Senate, helped by abstentions and a handful of votes from rebels in the anti-establishment 5-Star Movement.
New senate speaker Pietro Grasso, a top anti-mafia judge who made his name fighting organized crime in Palermo, and lower house speaker Laura Boldrini, a former spokeswoman for the UN High Commissioner for Refugees, represent a change from the career politicians who traditionally took such roles.
Even so, the result of the contest for the Senate speaker showed clearly that Bersani would not be able to win a confidence vote in parliament, with Grasso elected with 137 votes, 21 short of a majority in the 315-seat upper house.
"The figures show that Bersani cannot obtain any mandate to form a new government since he quite obviously has no majority in the Senate," Angelino Alfano, secretary of Berlusconi's People of Freedom (PDL) party told RAI 3 state television.
With the economy mired in recession and unemployment, especially among the young, at record levels, social tensions exacerbated by the crisis were reflected in the huge vote in February for Beppe Grillo's anti-establishment 5-Star Movement.
At the same time, Italy's 2-trillion-euro public debt remains vulnerable to the kind of bond market volatility which panicked investors and brought the euro zone to the brink of collapse during the financial crisis of 2011.
Saturday's vote was the first piece of parliamentary business since the election and despite the handful of 5-Star Senators who voted for Grasso, it gave little sign that the parties were ready to work together.
Alfano said the only alternative to new elections was an accord between the center-left and the PDL but said his party would demand in exchange to be able to nominate a president of the Republic to replace Napolitano whose mandate ends on May 15.
"We would propose a person of great prestige, absolutely acceptable to the left as well," he said, but declined to name the candidate.
Bersani's attempts to court the 5-Star Movement have been rebuffed by its fiery leader, who rejects any deal and who was angered by the mini rebellion in his party on Saturday, demanding that those who voted for Grasso should "take the consequences".
However the PD leader has been equally quick to reject any deal with Silvio Berlusconi, who is battling trials on charges of tax fraud and paying for sex with a minor as well as a separate investigation into accusations of political bribery.
Bersani said on Sunday that an alliance with the right would be inherently unstable and akin to putting "a flimsy lid on a pressure cooker".
"At this moment, political agreements made in advance would not work. The conditions aren't there," he said.