Italian PM Matteo Renzi agrees to delay resignation until budget is passed

Mr Renzi pledged he would step down after losing Sunday's constitutional referendum

Italian PM Matteo Renzi agrees to delay resignation until budget is passed

Italian Premier Matteo Renzi, left, speaks during a press conference at the premier's office Chigi Palace in Rome. Picture by Gregorio Borgia AP/Press Association Images

The Italian Prime Minister Matteo Renzi has agreed to to delay his resignation after a personal plea from the country's President.

The palace in Rome confirmed that Mr Renzi had told the president it was not possible for him to continue in his post following the defeat on Sunday of a constitutional referendum championed by Mr Renzi.

But President Sergio Mattarella asked Mr Renzi to stay on until the 2017 budget has been approved by parliament, possibly later this week.

Mr Renzi, the head of the centre-left Democratic Party, has been Prime Minister since February 2014, but promised he would quit if he lost Sunday's vote.

He had staked his political future on the reform, which was aimed at weakening the powers of the upper house to help streamline Italy's notoriously lengthy legislative process.

It would have also cut down the number of senators and cut the powers of regional authorities.

But he was attacked by his opponents, who described the reforms as dangerous for democracy.

Mr Renzi said he took full responsibility for the "extraordinarily clear" defeat, with the final count showing the "No" camp winning 59.1% to 40.9%.

The 41-year old former mayor of Florence told the country after his defeat: "My experience of government finishes here".

Monday saw a slump in the euro, which fell sharply against the US dollar and hit a four-and-a-half-month low against sterling, reaching a 1.20 exchange rate for the first time since July.

Coming after Brexit and Donald Trump's US election victory, Mr Renzi's defeat is being seen as another victory for the anti-establishment backlash sweeping much of Europe and America.

The referendum defeat is good news for the Italian opposition headed by former comedian Beppe Grillo's populist Five Star Movement, which wants Italy to ditch the Euro.