Italian Prime Minister Mario Draghi resigned on Thursday after his national unity government fell apart, setting the country on course for an early election and hitting financial markets.

Draghi, an unelected former central banker who has led a broad coalition for 18 months, tendered his resignation in a meeting with President Sergio Mattarella.

Mattarella's office said the head of state had "taken note" of the resignation and asked Draghi to remain in a caretaker capacity.

Mattarella plans to meet the speakers of both houses of parliament on Thursday afternoon. Political sources said earlier this week that he would likely dissolve parliament and call early an election in October.

A bloc of conservative parties, led by the far-right Brothers of Italy, looks likely to win a clear majority at the next election, a study of opinion polls showed this week. read more

Draghi's coalition crumbled on Wednesday when three of his main partners snubbed a confidence vote he had called to try to end divisions and renew their fractious alliance.

The political crisis has up-ended months of stability in Italy, during which Draghi had helped shape Europe's tough response to Russia's invasion of Ukraine and had boosted the country's standing in financial markets.

Draghi drew warm applause from lawmakers when he made a brief appearance in the lower house of parliament on Thursday.

"Even central bankers have their hearts touched sometimes," he quipped as he received the ovation.