UPDATE 1-Italy president says parties need time for govt deal, to report back Tuesday

(Adds Mattarella quotes and context)

ROME, Aug 22 (Reuters) - President Sergio Mattarella said several of Italy's parties had told him they needed more time to resolve a government crisis and avoid a snap election, and that he had told them to report back on Tuesday.

Speaking to reporters on Thursday after two days of talks, Mattarella said dissolving parliament was a decision that should not be taken lightly.

"The crisis must be solved with clear decisions and in a short time," he told journalists at the Quirinale Palace.

Prime Minister Giuseppe Conte resigned this week after the leader of the ruling League party, Matteo Salvini, announced that his coalition with the anti-establishment 5-Star Movement was no longer workable and called for an early election.

However, only Mattarella can dissolve parliament and he made clear he would do so only if the parties are unable to reach a deal to form a new government.

(Reporting By Gavin Jones, editing by Giselda Vagnoni and Kevin Liffey)