Italy's president has appointed former European Commissioner Mario Monti to head a new government charged with implementing urgent reforms to end a crisis that has endangered the whole eurozone.

After a frenetic weekend during which parliament passed the reforms and Prime Minister Silvio Berlusconi stepped down, President Giorgio Napolitano asked Mr Monti to form a government, expected to be composed largely of technocrats.

"The president of the republic ... has received Senator Mario Monti and conferred a mandate to form a government," said a statement from the presidential palace.

The respected economist, made a life Senator last week, is likely to name around 12 ministers on Monday, political sources said.

He will have declared support in parliament from opposition parties, centrists and Mr Berlusconi's PDL party.

A process that normally takes several days or weeks was completed over the weekend as Mr Napolitano raced to restore market confidence that collapsed disastrously last week.

Speaking at a press conference Mario Monti said that "Italy must be strong, not weak in Europe and that Italy can overcome the debt crisis with united effort."

Following weeks of political uncertainty and growing calls from international partners for action to control its debt, Italy's borrowing costs soared to unmanageable levels last week, threatening a Europe-wide financial meltdown.

Markets calmed at the end of the week once it became clear that Mr Berlusconi would go and Mr Monti take his place. Rome will watch on Monday to see if the formal nomination will continue the positive effect on markets.

If he manages to secure sufficient backing in parliament, Mr Monti will implement reforms agreed by Mr Berlusconi with eurozone leaders to cut Italy's massive debt and revive a chronically stagnant economy.

However there are clear signs that he will face problems, with Angelino Alfano, secretary of Berlusconi's PDL party, saying there was "huge opposition" among some of its members to a Monti government.

Mr Alfano said after meeting Napolitano this afternoon, however, that the party, which has been badly split by the crisis, would support Mario Monti.

But its agreement was conditional on the ministerial line-up and the policy programme of the new government, which must be based on reforms promised to Europe by Silvio Berlusconi.

EU reaction to Italy's announcement

The presidents of the European Commission and the European Council said that they were encouraged by Italy's move towards a government of national unity, saying it sent a sign of resolve to overcome the financial crisis.

Commission President José Manuel Barroso and Council president Herman Van Rompuy said in a joint statement they welcomed the decision by Italy's president to ask Mario Monti to form the government.

"We believe that it sends a further encouraging signal, following the swift adoption of the 2012 Stability Law, of the Italian authorities' determination to overcome the current crisis," the two said in a statement.

The Commission would continue to monitor the implementation of measures taken by Italy to foster growth and employment, as agreed at a meeting of EU leaders on 26 October.