One party wants a referendum on ditching the euro and another says it will pull the country out without a vote

Italy could end up ditching the euro if its prime minister loses a crucial referendum on reforming the country's constitution on Sunday.

Matteo Renzi has vowed to step down if he fails to convince voters to back a streamlining of the political system that includes curbing the powers of its Senate.

His resignation could lead to early elections and victory for his opponents who are promising to leave the single currency.

Matteo Renzi (pictured) has vowed to step down if he fails to convince voters to back a streamlining of the political system that includes curbing the powers of its Senate

Opinion polls now predict his defeat, in what would be the third big anti-establishment revolt by voters this year in a major Western country, following Britain's unexpected vote to leave the European Union and the US election of Donald Trump.

Pressure is mounting on Renzi to drop his threat and instead agree to remain in power to deal with the fallout from a 'No' vote, including the risk of a fullblown banking crisis.

Italy's leading opposition parties, the anti-establishment Five Star Movement and the anti-immigrant Northern League, have called for new elections in the event that Mr Renzi is defeated.

The Five Star Movement has pledged to hold a referendum on ditching the euro if they come to power, while the Northern League has said it will pull the country out without a vote.

Italy is now subject to a polling blackout, but the latest surveys published last weekend showed the vote against Mr Renzi's proposed reforms to the constitution had a significant lead.

Campaigners protest against Italian Prime Minister Matteo Renzi in Rome on Sunday ahead of the vote next weekend

On Saturday, Mr Renzi told Italian newspaper La Stampa that he would stick to his promise to step down if he loses.

The country's parliament is not due to hold its next elections until early 2018, but they could be brought forward if he resigns.

Polls show that Mr Renzi's Democratic Party and the Five Star Movement are both on around 30 per cent support.

The Northern League and Silvio Berlusconi's centre-right Forza Italia each have about 12 per cent support, and could have the option of taking power together in a right-wing coalition.

Mr Renzi has proposed drastically curtailing the powers of the second chamber, the Senate, while shrinking its membership and running costs.

ITALY AT A CROSSROADS: THE REFERENDUM EXPLAINED Why is Italy holding a referendum? On December 4, Italians will vote on proposed constitutional reforms that are considered the most important in the eurozone country since World War II. They are aimed at increasing political stability in a country which has had 60 governments since 1946, by streamlining parliament and the electoral system. A victory for prime minister Matteo Renzi would dramatically reduce the powers of the upper house of parliament while regions would lose some decision-making powers to bolster central government. Why would people vote 'No'? Critics say a 'yes' vote victory for Renzi would strip Italy of vital democratic checks and balances put in place after the Second World War. Renzi has also said he will resign if he loses the December 4 ballot - an outcome all opinion polls say is the most likely - on his plan to drastically reduce the role of the upper house Senate. Initially the plan was backed by 70 percent of Italians, but when an over-confident Renzi said at the end of 2015 he would step down if defeated, opposition parties turned the referendum into a de facto ballot on his 2.5 years in office. A victory for prime minister Matteo Renzi would dramatically reduce the powers of the upper house of parliament while regions would lose some decision-making powers to bolster central government His record is mixed. Despite many reforms, Italy is set to have the third lowest growth in the 28-nation European Union in 2016 and the second lowest next year, according to EU forecasts. Unemployment is stuck above 11 percent and wages are stagnant. A loss would provide more evidence of voter fury in Europe ahead of elections in France and Germany next year. And Renzi's exit could benefit populist ex-comedian Beppe Grillo, who wants to ditch the euro currency and whose Five Star movement won more than a quarter of the vote in Italy's last general election in 2013. Why might defeat mean leaving the Euro? Italy's leading opposition parties, the anti-establishment Five Star Movement and the anti-immigrant Northern League, have called for new elections in the event that Mr Renzi is defeated. The Five Star Movement has pledged to hold a referendum on ditching the euro if they seize power, while the Northern League has said it will pull the country out without a vote. Advertisement

The changes are designed to go hand-in-hand with a new electoral reform law designed to ensure elections produce winners with clear majorities.

Mr Renzi has claimed this will modernise Italy, putting an end to endemically weak administrations and logjams in parliament which have stymied equally overdue reforms in areas ranging from education and the snail-paced judicial system to the fight against corruption and organised crime.