Cottarelli, 64, will meet with President Sergio Mattarella after talks between the head of state and populist parties on the cusp of forming a new government fell apart over the inclusion of eurosceptic Paolo Savona as economy minister.
Cottarelli's likely appointment as prime minister has already attracted the wrath of the anti-establishment Five Star Movement and nationalist League, which have denounced a "premeditated" strike from Mattarella and European "lobbies" against their proposed coalition government.
The chances of the economist gaining approval for any technocrat government are slim, as Five Star and the League boil with anger at their own coalition stumbling on the home straight.
League leader Matteo Salvini said that Cottarella was a "Mister Nobody" who "represents financial institutions", while the head of Five Star Luigi Di Maio laughed off his chances of ever gaining the endorsement of a parliament in which his and Salvini's parties command a majority.
"They've replaced a government with a majority with one that won't obtain one," said Di Maio to supporters at a rally near Rome.
He was director of the IMF's fiscal affairs department from 2008 to 2013 and became known as "Mr Scissors" for making cuts to public spending in Italy while charged with the revision of public spending by Enrico Letta's short-lived centre-left government.
Looking back on his time under Letta, Cottarelli lamented the resistance of bureaucrats in Rome to help him carry out his role, claiming that "often I wasn't even given the documents I asked for".
In 2014 Letta's successor, Matteo Renzi, nominated him as the IMF's executive director for Italy, Greece and Malta before leaving the institution in October 2017.
Since then Cottarelli has worked as director of the Public Accounts Observatory at the Catholic University of Milan, and as a TV pundit he has offered a string of warnings about the economic cost of the Five Star and League's joint government programme, which includes huge tax cuts and a ramping up of welfare spending.
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