Rome: Italy's 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 Tuesday.

"Significant progress has been made on a cabinet and on appointing a prime minister amid constructive cooperation between the two sides.

"The goal is to finalise everything is as short time as possible to give answers and a democratic government to Italy," said the statement, coming after a meeting at the Italian parliament between Di Maio - who heads Italy's largest party - and Salvini - who leads the biggest political bloc.

President Sergio Mattarella on Monday gave the pair a further day of last-ditch talks on forming a coalition after two months of political deadlock since Italy's inconclusive March 4 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 Monday, 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.

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