Italy's president has given former Prime Minister Giuseppe Conte the green light to form a new Government, just days after his previous coalition collapsed.

Mr Conte will now work to form a coalition between the Movimento 5 Stelle (M5S) and the opposition Partito Democratico (PD).

He resigned his position nine days ago after losing the support of the leader of the right-wing Lega party Matteo Salvini.

Mr Salvini had aimed to force a fresh election in a bid to make the most of his party's success in the European elections.

However, that move now appears to have backfired with M5S and the PD expected to set aside their long-standing differences to form a government.

Matteo Salvini, Lega political party leader speaks to the Media after a meeting with the Italian President Sergio Mattarella as part of consultations with political parties on the formation of a new Government, 28-08-2019. Image: Cosimo Martemucci / SOPA Images/Sipa USA

In a tweet this afternoon, Mr Conte said now is the time to show the "courage and determination" to build a better country.

If efforts to form the new government are successful, it could mark a turning point in Italy's stormy relationship with the EU - with Mr Conte saying Italy, a founding member of the EU, must return to being a "protagonist" in the bloc.

However, there is still plenty of negotiation to be done with the two parties yet to agree on a Cabinet and policy platform.

The PD has already said M5S leader Luigi Di Maio must step down as deputy prime minister if Mr Conte is to be prime minister.

Meanwhile, M5S is expected to ask its members to vote on any agreement using its online network.

Questo è il momento del coraggio, e della determinazione. Il coraggio di disegnare un Paese migliore. La determinazione di perseguire questo obiettivo, senza lasciarsi frenare dagli ostacoli. Di mio aggiungerò tanta passione, che mi sgorga naturale nel servire il Paese che amo pic.twitter.com/fGOwNvQV1Y

— Giuseppe Conte (@GiuseppeConteIT) August 29, 2019

The new government's first challenge will be to draft a budget for 2020 to stave off a VAT hike due to come into force on January 1st.

The tax rise will be introduced unless the country can fill a €23bn hole in its finances another way.

If the money can't be found, the country's deficit would increase from its target of 2.1% to 3.4% - breaching EU budget rules.

“We must immediately get to work and draw up a budget to avert the VAT hike, protect savers and offer solid prospects for economic growth and social development,” said Mr Conte.