Here is what could happen next:

Are early elections guaranteed?

The possibility of Draghi staying in his post at the request of President Sergio Mattarella until early next year -- when general elections were originally scheduled -- is highly unlikely after the implosion of the premier's broad coalition.

"It seems very clear to me that the conditions are no longer met to have a new government," Gaetano Azzariti, a constitutional law professor at Rome's La Sapienza University in Rome, told AFP.

Although the president has broad powers in constitutional crises, it is still parliament which ultimately decides who governs.

And on Wednesday, "the answer of the parliament was very clear", said Azzariti.

If Mattarella chooses to dissolve parliament, which would trigger new elections, he could then ask Draghi to manage affairs until the vote.

When could elections take place?

Elections must be held within 70 days of the dissolution of parliament. But the situation is complicated by the budget, which must be presented to parliament before October 15.

If Mattarella dissolves parliament Thursday or in the next few days, the elections, which are held on Sundays, could be September 18 or 25.

To avoid an election campaign in the traditional vacation month of August, when most Italians are at the beach, Mattarella could delay dissolving parliament so that a vote could be held October 2. Parliament must then meet within 20 days of the vote being held.

Who is favourite in the event of early elections?

The obvious favourite is Italy's right-leaning coalition, which unites Silvio Berlusconi's Forza Italia party and the far right represented by the anti-immigration League, led by Matteo Salvini, and the post-fascist Brothers of Italy.

The latter party, led by Giorgia Meloni, is in top place in voter intention polls, with nearly 24 percent, ahead of the Democratic Party at 22 percent and the League at 14 percent, according to a poll by the SWG institute carried out on July 18, three days before Draghi's resignation.

Forza Italia is currently expected to reap about seven percent of the vote and the populist Five Star Movement 11 percent.

Italy's current electoral law, a complex mix of proportional voting and first past the post, is "a great advantage for the centre-right," Azzariti said.

The rightist coalition starts with an advantage. Having already decided to present a common candidate, "it is clear that it is the centre-right that will win", he said, despite differences within that coalition and tensions between Meloni and Salvini.

Moreover, the failure of Forza Italia to support Draghi in a confidence vote has disillusioned some of its own parliamentarians. Two Forza Italia members of Draghi's cabinet decided to leave their party Thursday.