Italy's ruling League Party is set to present a no-confidence motion against the government in the Senate, the party said in a statement on Friday.
The heads of political groups will meet on Monday to set a date for the vote, the upper house press office said.
The League said on Thursday the only alternative to the current government was a fresh election, as it ruled out another cabinet reshuffle in the wake of growing policy differences with its coalition partner, 5-Star.
The right-wing party said in a statement it was "useless to go ahead with daily quarrels", and listed a raft of areas in which it had a "different vision" from 5-Star, including infrastructure, taxes, justice, and relations with the EU.
"Italy can no longer put up with the no's, we need yes's, we need to unblock, to build, to work -- enough is enough, we must go to elections," said Deputy Prime Minister Matteo Salvini.
As worries about the stability of Italy's government rattled investors, European shares fell on Friday, leading them to post a second straight week of losses.
Prime Minister Giuseppe Conte said on Thursday that Salvini should explain to Italians why he wants to bring down the coalition government. He said it was not up to the interior minister to convene parliament and said Salvini relied on "slogans" to gain support.
"The League note is incomprehensible. They have to clearly state what they want to do. They have to be clear," 5-Star replied in a statement.
The government looked to be nearing the brink of collapse yesterday, when the Italian Senate rejected a motion by 5-Star to block an alpine rail link with France, paving the way for the long-contested project to continue.
The upper house of parliament rejected 5-Star’s motion by 181 votes to 110.
The 5-Star Movement is the largest party in parliament but it was outvoted by the combined forces of the League and opposition parties from the left and right.
The planned line, meant to connect the Italian city of Turin with Lyon in France, includes a 58-km tunnel through the Alps. It is fiercely opposed by 5-Star but supported by the League and by most other parties in parliament.
League's leader Matteo Salvini said on Tuesday that tensions with 5-Star meant the government could soon collapse, and the parliamentary debate ahead of Wednesday's Senate vote exposed the growing gulf between the two parties.