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Enrico Letta appears set to become Italy's new prime minister, after being asked by President Giorgio Napolitano to form a broad coalition government.

The appointment of Mr Letta, currently deputy leader of the centre-left Democratic Party, could see the end of two months of parliamentary deadlock.

An inconclusive general election in February left the country in political limbo.

Mr Letta said he would aim to change the course in Europe on austerity.

"European policies are too focused on austerity which is no longer enough," he said, following the closed-door meeting with the president in Rome.

The 46-year-old also said he had accepted the post knowing that it was an enormous responsibility and that Italy's political class "has lost all credibility".

Mr Letta must now form a cabinet that can win cross-party support and a vote of confidence in parliament, possibly this weekend.

Factions from across the political spectrum, including former Prime Minister Silvio Berlusconi's right-wing People of Freedom Party (PDL), have indicated that they are ready to form a coalition under a figure like Mr Letta.

However, Mr Berlusconi's party and the Democratic Party (PD) differ on a number of issues.

PDL National Secretary Angelino Alfano warned that his group would not take part in a government unconditionally.

Mr Letta, once a member of the former centre-right Christian Democrats, is seen as moderate of the left. His uncle, Gianni Letta, has been Mr Berlusconi's chief-of-staff for 10 years.

A broad political alliance would again make Mr Berlusconi a major influence.

This awkward coming together of bitter rivals is seen as the only way to end the parliamentary stalemate and put an administration in place, says the ´óÏó´«Ã½'s Alan Johnston in Rome.

But it is a forced political marriage that may not last long, our correspondent adds.

Mr Letta's candidacy for prime minister came about after the PD leader, Pier Luigi Bersani, announced his resignation last week.

He had ruled out working with Mr Berlusconi and faced a party rebellion over his choice for Italian president.

The third strongest political force to come out of February's election, former comedian Beppe Grillo's Five Star movement, could not be persuaded to join a coalition and is expected to be in opposition.

With the Italian economy still struggling, the new government will be expected to try to implement a limited range of economic and institutional reforms.

Among its priorities will be an effort to re-shape the current election law. The aim would be to ensure that future general elections would deliver more emphatic, clear-cut results.

Mr Letta's appointment follows the swearing-in on Monday of President Napolitano, who berated his country's feuding politicians.

Taking up an unprecedented second term, he told the assembled MPs that they had been guilty of a long series of failings and that their inability to implement key reforms had been "unforgivable".

He has threatened to resign if no administration is formed.