Law professor Giuseppe Conte received a government-formation mandate from President Sergio Mattarella Friday night and presented his list of ministers, who will be sworn in at 16:00 Friday.
Anti-establishment 5-Star Movement (M5S) leader Luigi Di Maio and anti-migrant Euroskeptic League leader Matteo Salvini earlier agreed to form a new government with Conte as premier.
President Sergio Mattarella called Conte at 21:00 Thursday to hand him a second government-formation mandate, after his first effort foundered over an anti-euro economy ministry pick.
The two leaders said after talks Thursday that "an accord has been reached for an M5S-League government with Giuseppe Conte as premier".
They said earlier there were the "conditions" for a political government.
Salvini said on Facebook "commitment, consistency, listening, work, patience, good sense, head and heart for the good of Italians. Perhaps we're finally there after so many obstacles, attacks, threats and lies. Thanks for your trust friends, I love you and know that I'll need you".
The two men had met in Rome Thursday for talks on the possible new government, 88 days after the inconclusive March 4 general election.
They were later joined by their potential premier pick, Florence law professor Conte.
The talks were said to be focusing on a possible new post for anti-euro economist Paolo Savona, whose rejection as economy minister by President Sergio Mattarella led to the collapse of the first M5S-League government formation bid on Sunday.
There has been speculation as to who would take Savona's place at the economy ministry.
Rome Tor Vergata University economics lecturer Giovanni Tria is now being lined up as economy minister, M5S sources said.
Savona would move to European affairs and Enzo Moavero Milanesi, a former EU affairs minister, would be foreign minister, the sources said.
Salvini said earlier he was engaged in the "last hours" of talks to form a government with the M5S. "Last hours of work for the government, we're putting everything into it! Meanwhile the news takes us back to harsh reality, with an immigrant picking off the feathers of pigeons in broad daylight and in the middle of the street...Go home!" he wrote on Facebook.
Far-right nationalist Brothers of Italy (FdI) leader Giorgia Meloni met Salvini earlier amid speculation she might be a candidate for a ministry if the FdI joined the government majority.
But Meloni said Di Maio had ruled this out, and FdI would abstain in a confidence vote. She also said she could rule out there being any FdI ministers "without our knowledge".
Di Maio was said to be wary about having another far-rightist as well as Salvini as his partner, since polls show the M5S has been bleeding voters it gained from the centre-left Democratic Party (PD) on March 4 because of the possible new government's rightward drift.
Rightwing policy points in the "contract for a government of change" the League and the M5S drew up include a 'flat tax' with two rates, 15% and 20%, which would allegedly disproportionately benefit the better off, and a huge crackdown on migrants, with Salvini vowing to eject over half a million of them and set up detention centres across Italy.
More leftwing policies, advanced by the M5S, include a universal basic income for job seekers.
Salvini, for his part, was said to be looking at criticism from his voters about his perceived unwillingness to join a government and instead bank on benefitting from a surge in support in fresh elections.
Meanwhile law professor Conte left his post as lecturer in Florence to travel down to Rome on Thursday afternoon. Conte was to be the premier of the M5S-League executive that self-destructed after Mattarella vetoed Savona, citing the threat to Italians' savings because of market turbulence that would ensure from having an economy minister who was openly against the euro and Germany.
Since then, both Di Maio and Salvini have repeatedly stressed they do not want to leave the euro.
Meanwhile ex-IMF official Carlo Cottarelli, who had been waiting in the wings as a possible stopgap technocrat premier to lead Italy to new elections at the end of this year, handed back his mandate, paving the way for the new executive which could be sworn in as early as Friday.
Cottarelli said it had been a "great honour to work for the country, if only for a short time" and that a political government was "a better solution". He sent his best wishes to the possible new government, saying "I hope it is born".
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