Italy's parliament failed to elect a new president during a second round of voting Thursday, sending into a third round a ballot many hope will herald the end of a two-month impasse over a new government but which threatens fresh political divisions.

Whoever is elected will face the unenviable task of trying to bring the bickering parties together to break a deadlock that has raised fears of instability in the eurozone's third-largest economy.

"This leaves Italy in a bigger mess than ever," James Walston, professor of international relations at the American University in Rome, told AFP.

None of the candidates managed to win the necessary two-thirds support in the second round of voting and the majority of the ballots were spoilt by party members from across the political sphere playing for time in the hope of finding a winning candidate to agree on.

"They are buying time for negotiations," said Walston, adding that the main casualty of the impasse was the centre-left, which was rocked internally by a controversial last-minute bid for a deal with the right.

Just hours before the first vote, Italy's two main political blocs had agreed to back Franco Marini, a pipe-smoking 80-year-old seen as having formidable political skills.

But leftist leader Pier Luigi Bersani's bid to clinch a deal with his rival Silvio Berlusconi over Marini infuriated many within the centre-left bloc and rebel voters came out in support for Stefano Rodota, a widely respected 79-year-old human rights advocate.

Voters from Bersani's Democratic Party (PD) were set to meet before Friday's vote in a bid to find a common candidate, after young members of the party protesting against Marini seized and occupied a PD branch in Tuscany.

Slammed as having neither public support nor international standing, Marini failed to garner enough support in either vote and Walston said the former Christian Democrat was likely out of the running.

Dissidents said they would not vote for such an establishment figure and many across the left accused Bersani of cozying up to scandal-tainted ex-premier Berlusconi and the right.

The voting to elect a successor to President Giorgio Napolitano brings together both chambers of parliament as well as regional representatives, with a total of 1,007 people eligible to vote.

A candidate must be supported by a two-thirds majority in the first three rounds of voting or by a simple majority from the fourth vote onwards.

Experts said the parties would likely spoil their ballots in the third round on Friday, scheduled to begin at 0800 GMT, before voting properly in the fourth.

A failure on Marini's part to win the presidency would be a severe blow to Bersani, and some fear the centre-left bloc may split apart, throwing Italy's political scene into further chaos.

The left, "ever more divided and exposed to the napalm of its own internal Vietnam, risks paying dearly", warned political expert Massimo Giannini in La Repubblica daily.

Bersani appeared to be carrying out damage control after the second vote on Thursday, calling for "a new phase" and saying that his party would propose a new candidate to the voters.

Other names in the rumor mill have included three former prime ministers -- Giuliano Amato, Massimo D'Alema and Romano Prodi -- as well as former European commissioner Emma Bonino.

Winning consensus from Italy's bickering political parties "appears more difficult than squaring the circle," political commentator Massimo Franco said in the Corriere della Sera daily.

The centre-left won elections in February but failed to get a parliamentary majority.

Bersani has so far ruled out a coalition with Berlusconi, but the media magnate has said there should be new elections if there is no deal, and polls indicate he would win.

On Thursday, the billionaire said "internal divisions" within the PD meant a deal on the presidential candidate was out of the picture, and called for elections in June because "the country is paralyzed."

While the presidency in Italy is a mostly ceremonial post, it takes on critical importance during times of political crisis.

Napolitano's hands were tied in negotiations between the parties since he was constitutionally prevented from calling elections in the last six months of his seven-year mandate.

His successor will have full powers to hold this out as a threat.

Big business, trade unions and the Roman Catholic Church have issued desperate pleas to politicians to set their differences aside as the country endures its worst recession since the post-war period.

Giorgio Squinzi, head of the main employers' association Confindustria, has warned of a rise in bankruptcies and said the political crisis had already cost the economy around 1.0 percent in gross domestic product. (AFP)