Matteo Salvini, leader of Italy's League party, has called for a snap election, saying differences with coalition partners cannot be mended.
A failed attempt by the Five Star Movement to derail plans for a high-speed rail link showed the coalition could no longer govern, he said.
Five Star leader Luigi Di Maio said his party did not fear another election.
Mr Salvini's right-wing party is well ahead in opinion polls, due mainly to his stance against illegal immigration.
Mr Salvini is also very active on social media and has developed a "man of the people" image, pushing for tax cuts despite Italy's €2.3tn (£2.1tn) debt mountain, which is second only to Greece's in the EU.
In last year's election, Five Star won twice as many votes as the League, but polls suggest the proportions have been reversed.
In European elections held in May the League came top with 34% of the votes in Italy, whereas Five Star got about 17%.
Giuseppe Conte, the non-party law professor who serves as the coalition's prime minister, has said Mr Salvini, Italy's interior minister, must "justify" to parliament his call for an election.
Both Mr Salvini and Mr Di Maio are deputy prime ministers.
The authority to dissolve parliament rests with President Sergio Mattarella, but he may be reluctant to do so, as next month MPs - who are currently on holiday - have to consider the 2020 budget.