Draghi set to clarify his intentions on Wednesday.

Rallies were held in several Italian cities on Monday calling on premier Mario Draghi to stay in office as pressure mounts on the former ECB chief to remain at the helm of Italy's national unity government.

Around 1,300 Italian mayors, together with business leaders and university deans, urged Draghi to rethink his decision to resign after the populist MoVimento 5 Stelle (M5S) pulled out of a key confidence vote in the coalition government last Thursday.

Italy's president Sergio Mattarella refused to accept Draghi's resignation, asking him to assess the political situation before reporting to parliament on Wednesday.

• Italy's president rejects Draghi's resignation

Draghi tendered his resignation after the M5S, led by former premier Giuseppe Conte, failed to back a crucial vote on a €26 billion cost-of-living package last week.

Although Draghi won the confidence vote comfortably, he had previously warned that he would not continue to govern without the backing of the M5S.

Conte claims the government has refused to listen to proposals from the M5S which is opposed to sending more military aid to Ukraine.

The political crisis comes as Italy prepares to receive billions of euro in EU post-pandemic recovery funds, and ahead of the scheduled general election in spring next year.

If Draghi were to resign on Wednesday and the country went to the polls early, analysts predict a coalition on the right would come to power, led by the right-wing Fratelli d'Italia which has stayed out of the government and is leading in opinion polls.