The Italian “spread”, or the difference in the yield on Italian and German sovereign bonds, widened on Thursday in a sign of mounting investor concern over Italy's financial stability.
But is an early election really likely? Here are three broad scenarios outlining what could be next for Italy's government.
1. Resignations and a reshuffle
The opposition has also called on the government to resign, arguing it no longer has a workable majority in parliament after Salvini's fellow Deputy Prime Minister Luigi di Maio voted against the Lyon-Turin TAV rail project.
Italian media reported that Salvini, in talks with Prime Minister Giuseppe Conte, set conditions for staying in the coalition — including the resignation of the transport, defence and economy ministers, who have resisted his party's projects and policies.
A gentler reshuffle is seen as possible, however, since Salvini has refrained from publicly attacking Di Maio of the anti-establishment Five Star Movement over his opposition to the rail project, which involves the construction of an 8.6-billion-euro tunnel through the Alps.
2. Early election
If the government collapses and opposition parties can come up with no workable alternative, a snap election could be called for October to reconstitute parliament.
This is the option being pushed for by Salvini, whose League party would win a majority, opinion polls indicate.
Analysys say the League could then govern in alliance with another, smaller far-right party, Fratelli d'Italia.
3. Technical patch
President Sergio Mattarella, wh has the sole power to dissolve parliament, has insisted there must be a government in place to finalise the country's budget, a first draft of which has be submitted to EU authorities by the end of September.
To that end, the president could name a government of technocrats and push the elections back to February or March.
The government is struggling to rein in its public deficit and its mammoth debt mountain of more than 2.3 trillion euros.