Italian President Giorgio Napolitano has asked centre-left deputy leader Enrico Letta to form a new government.

It comes two months after an inconclusive general election in the eurozone's third largest economy.

The prime minister designate is expected to quickly select a group of ministers, mixed between politicians and technocrats, under the guidance of the president.

The new government could go to parliament for a vote of confidence by this weekend.

Accepting his mandate, Mr Letta, a former Christian Democrat from the right wing of his Democratic Party, said he was surprised by the nomination and felt the profound responsibility on his shoulders.

Italy faced a "difficult and fragile" situation that could not continue and the government must provide answers on jobs, poverty and the crisis facing small businesses in a deep recession, he said.

He added that European economic policies have been too focused on austerity instead of growth.

Mr Napolitano's re-election last weekend opened the way for an end to the crisis.

Mr Letta, 46, speaks fluent English and is an elected member of parliament.

He will be the second youngest prime minister in Italian history and as a staunch pro-European is likely to be welcomed by foreign governments and markets.

The new government will be backed primarily by Mr Letta's centre-left and the centre-right of Silvio Berlusconi, which had failed to cut a deal following inconclusive elections in late February.

Formation of a government after two months of turbulent political impasse will send a signal that Italy might at last be ready to make a start on much-needed reforms.

Investors have already reacted with relief to the prospect of an end to the intractable crisis, with Italy's borrowing costs tumbling to their lowest level since the start of European monetary union in 1999.

However, the country's problems are not over, with significant differences remaining between left and right over economic policy.