Italian President Sergio Mattarella said political consultations on forming a caretaker government would begin on Thursday, having to choose between early elections, technical government and electoral reform after the resignation of Prime Minister Matteo Renzi, informs AFP.

Matteo Renzi bowed out as Italian prime minister on Wednesday with a combination of jokes, regrets and a strong hint that he wants to lead his party into an early election battle.

"And hopefully tomorrow (Thursday) I will have more luck in the PlayStation battle with my sons than I have had here," he added.

Before handing back the keys to his Palazzo Chigi residence, the 41-year-old chaired a meeting of the executive of his Democratic Party (PD).

"We are not afraid of anything or anybody, if other parties want to go to the polls .... the PD is not afraid of democracy or elections," Renzi said, in reference to opposition clamour for a nationwide vote due in early 2018 to be brought forward by up to a year.

Polls taken before the referendum suggested that the PD remains well-placed to emerge from an election with the largest share of the vote, despite the upward trend in backing for the populist Five Star Movement.

The opposition meanwhile insists the referendum was a vote of no confidence in the centre-left coalition.

"Either we have immediate elections or we take to the streets," Matteo Salvini, leader of the far-right Northern League, warned Wednesday.

The confidence vote curtailed prolonged discussion on the approval of Italy's 2017 budget -- an unfinished task which had prompted Mattarella to ask Renzi to delay his departure for a few days.

"Budget law approved. Formal resignation at 19:00. Thanks to everyone and viva l'Italia!" ("long live Italy!") he tweeted. This being Italy, 19:00 (7 pm) came and went, and Renzi had still not resigned.

- Better luck at PlayStation -

Ironically, Renzi's rule came to an end with his government winning a vote of confidence in the Senate, the parliamentary chamber he tried to emasculate with a referendum in which he suffered a crushing defeat on Sunday.