Italy's feuding political parties have continued tense backdoor discussions after the president refused to accept Prime Minister Mario Draghi's resignation.

Draghi, dubbed Italy's "super-Mario" for helping steer the country through its COVID-19 pandemic recovery, says he can't govern after losing the support of a major coalition party, which abstained from voting in a crucial aid package. 

And now, political parties have been given until Wednesday to resolve their differences or the stage will be set for an early election.

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Weeks of unrest came to a head when one of the biggest parties, the 5-Star Movement, refused to support the government's multi-billion-dollar aid package for businesses and families.

Party leader and former prime minister Giuseppe Conte says it doesn't go far enough to help Italians struggling with rising bills.

The government did win the confidence vote in the Italian Senate thanks to the backing of other coalition parties.

But Draghi said without the support of 5-Star, he couldn't: "Today's votes in Parliament are very significant from a political point of view. The national unity majority that supported this government since its creation no longer exists."

However, President Sergio Matterella rejected his resignation and urged for talks to continue.

General elections are scheduled for next spring, but if a compromise can't be reached and the government collapses, Italians could be going to the polls as early as this autumn.

Political experts say that while the chaos has smeared the image of the 5-Star Movement, it's put the center-right parties in a position of advantage.

Draghi will address parliament on Wednesday to clarify his position. Until then, it's an anxious wait and uncertain future amid Italy's soaring cost of living, rising COVID-19 cases, and the need to finalize its EU Recovery Fund budget.