The centre-right coalition now dominating includes a smaller far-right party, with 33% to 36% percent of the vote, compared with the anti-establishment 5-Star Movement's 29.5% to 32.5%.
A surge for populist and far-right parties in Italy's general election left the country in political deadlock on Monday with a hung parliament likely after a campaign dominated by anti-immigration and populist rhetoric. Financial markets opened lower on Monday on the news and were volatile.
"Di Maio wins, Italy ungovernable", was the front page headline on La Stampa newspaper.
Preliminary results released by Italy's interior ministry showed the centre-right coalition winning about 37 per cent of the parliamentary vote and the 5-Star Movement getting about 32 per cent, with the centre-left coalition far behind with 23 per cent.
By contrast, Salvini and Berlusconi - heading for nearly 18 per cent and 14 per cent respectively - appeared to have dominated the wealthier north, with the centre-left squeezed into a narrow stretch of central Italy.
Further, they were led by leaders considered old or failed, like former prime minister Silvio Berlusconi and Renzi, while the more right-populist parties of Five Star and the League were led by younger, more vivid and aggressive personalities. The First Star Movement has discussed a universal income.
"Immigrants are the flawless scapegoat for all manner of angst, both economic and cultural, and very easy fertile ground for the populists", said Simon Tilford, chief economist for the Institute for Social Change. The reversal from Five Star's insistence that it will go it alone came as Di Maio said Monday that the party now has 'a responsibility to govern Italy'.
The leader of the 5-Star Movement, Luigi Di Maio, says the party's strong showing throughout Italy means that it should run the next government.
"The success of the more rightist movements and parties is the effect of the growing preoccupation of a large section of voters on the excessive wave of immigration ... and on the economic crisis", he said.
"Renzi has been obliterated in what is perhaps the shortest boom-to-bust cycle of Italy's political history", Francesco Galietti, political analyst at Policy Sonar, said in a note.
Markets are waking up this morning to uncertainty over the political situation in Italy, after a general election resulted in no clear victor and a surge of populist sentiment. "Be prepared for long and complex negotiations", said Lorenzo Codogno, a former chief economist at the Italian Treasury. This puts it on course to becoming Italy's largest party, but not big enough to form a government on its own.
As the results came during the night after the polls closed, it became immediately clear that no party or bloc would gain the 40 percent majority of seats needed in the Italian parliament to be able to govern the country. British far-right, pro-Brexit campaigner Nigel Farage also congratulated the 5-Stars.
It will now be up to President Sergio Mattarella, a constitutional scholar, to sound out the political parties to determine who has the best chances of forming a government.
During two months of grinding election campaigning, party leaders repeatedly ruled out any post-election tie-ups with rivals.
"Keeping these promises would send the budget deficit over the 3 per cent limit", said Nobile, referring to the European Union budget rules that govern the single currency.
The European Union has insisted that Italy take charge of the newcomers, letting hardly any of them move to other EU states.
The election results showed a stunning loss for the Democratic Party, the main partner in the center-left government that has ruled Italy since 2013.