Talks between Italy's anti-establishment Five Star Movement and the Democratic Party resumed on Saturday after a quarrel that had threatened to stop the nascent coalition in its tracks. 

Tensions remained however on the hot-button issue of migration, a highly emotive subject in Italy, where hundreds of thousands of people fleeing war and poverty have washed up in recent years after crossing the Mediterranean. 

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Italy's 5-Star unsettles PD with tough terms for coalition deal

The parties, former foes who have agreed to govern together to prevent Italy going to early elections, were tentatively upbeat after policy discussions, which were also attended by premier-designate Giuseppe Conte. 

"We have taken some steps forward," said Graziano Delrio, lower house leader of the Democratic Party (PD). 

Conte has been tasked with forming a new government following the collapse of Italy's populist coalition earlier this month. 

On Friday the M5S – which has far more seats in parliament than its new ally – had warned that the deal could still fall apart, should the PD not agree to a list of key demands. 

The suggestion by the Movement's chief, Luigi Di Maio, that he was ready to pull the plug and return to the polls alarmed the markets and angered the PD. 

"We'll see over the coming hours," Five Star's Senate chief Stefano Patuanelli told reporters Saturday, but the preliminary talks had gone well, he added. 

But just hours later the parties appeared once again set on a collision course. 

The M5S has insisted a controversial law – crafted by one time coalition partner and hardline interior minister Matteo Salvini – against charity ships which rescue people in the Mediterranean should not be altered or scrapped by the new government. 

PD chief Nicola Zingaretti however called for people trapped in limbo at sea on rescue ships to be given shelter. 

On Saturday, Salvini banned the German Alan Kurdi charity ship from entering Italian territorial waters after it saved 13 people at sea, having already forbidden the Italian Mare Jonio rescue vessel from nearing land. 

The charity Mediterranea Saving Humans which runs the Mare Jonio warned the situation on board was deteriorating and it desperately needed a safe port. 

"We don't want to see these things anymore. It's inhuman. Allow these human beings off now," Zingaretti tweeted. 

Italy has been in political turmoil since Salvini pulled his support from the League-M5S coalition. 

The PD-M5S tie-up would keep the far-right out of power, while a return to the ballot boxes would likely favor Salvini, whose anti-immigrant stance has seen him shoot up in the polls. 

On Saturday, Salvini told a rally that a general election was the only option, saying "even my six-year old daughter laughs at the idea that the PD and M5S can agree on anything."

(Cover: Red Light is seen outside the Quirinale Presidential Palace during the second round of talks to form a new government in Rome, Italy August 27, 2019. /VCG Photo)