Italian President Sergio Mattarella rejected Prime Minister Mario Draghi’s resignation on Thursday.

Dragi announced he would resign as leader after coalition party, the 5-Star Movement, declined to take part in an earlier confidence vote over plans to tackle skyrocketing prices.

“I will tender my resignation to the President of the republic this evening,” Draghi told the Cabinet, according to a Reuters report.

"The national unity coalition that backed this government no longer exists," the PM added.

Draghi visited Rome’s Quirinale Palace to meet the President, who urged him to reconsider and address parliament to obtain a clearer view of the situation.

The Prime Minister is set to appear in parliament on Wednesday.

The 5-Star Movement had previously opposed a decree aimed at reducing inflation and combatting soaring energy costs, CNBC reports. Lawmakers held a confidence vote on the policies, but 5-Star refused to take part, despite the PM saying he would resign if they didn’t support the package.

According to analysts, 5-Star’s opposition to the policy package stems from internal party disagreements. “The move by the M5S was largely triggered by turmoil prevailing within the ailing party rather than by meaningful policy differences with the executive,” according to Wolfango Piccoli, co-president of the consultancy firm Teneo.

Mario Draghi stated he wouldn’t want to head up a government without 5-Star, which was the largest party in the 2018 election, but since then has endured a loss of public support, Reuters news agency reports.

President Mattarella can attempt to convince Draghi to form another government, locate a caretaker leader ahead of next year’s election, or call an early election.

Italian bond yields surged during the session before Draghi’s announcement, whilst the country’s FTSE MIB lose 3.3% by the time the market closed.