M5S's decision to boycott the vote on a €23 billion aid bill designed to offset the soaring cost of living for Italians was seen as a fatal blow to the integrity of the coalition government.

Draghi resigned on Thursday evening, saying the "pact of trust that the government is based on has gone". He had been appointed as a technocratic prime minister in February 2021 after a previous government collapse.

Italy's head of state President Sergio Mattarella refused to accept the prime minister's resignation, however, and pressed Draghi to reconsider.

Draghi will now leave on a scheduled state visit to Algeria to negotiate a gas deal, but has agreed to return to parliament on Wednesday at Mattarella's request to see whether a resolution can be reached.

What does this all mean for Italy? At this stage things could go any number of ways; we take a look at some possible scenarios put forward by Italian media and political and financial analysts.