A financial crisis is threatening the future of Europe’s oldest opera house, a Neopolitan cultural icon rescued from ruin during the Second World War by occupying British Forces. The San Carlo theatre has been placed under government control because of near bankcruptcy, a plight widely viewed as a metaphor for the city’s decline in the face of rising crime and Mafia dominance.

Francesco Rutelli, the Culture Minister, said that he had dispatched an “extraordinary commissar” from Rome to take over the theatre, arguably the most beautiful opera house in Europe, which is running a budget deficit of €20 million (£13.5 million).

“This humiliation is symptomatic of a city in an advanced state of decomposition,” Roberto De Simone, noted composer and former artistic director of the San Carlo, said. “It symbolises the collapse of Naples itself.”

The crisis at the theatre comes as bloody gang warfare returns to the streets of Naples. Yesterday two members of the Camorra, the Naples Mafia, were murdered while driving, with the killers drawing alongside and opening fire. Police said that the killings were part of a ruthless war between Camorra clans over drugs, arms trafficking and protection rackets.

Last year the centre-left government of Romano Prodi announced a “crackdown on crime” in Naples but resisted calls for the army to be deployed. Rosa Russo Iervolino, the mayor, said that the situation remained “dramatic”, with the Camorra carrying out vendettas in the city centre as well as in the grim suburbs.

The San Carlo, founded in 1737 next to the Royal Palace overlooking the Bay of Naples, has always been the gathering place for the social elite. Stendhal, the French writer, observed in 1817 that the San Carlo “dazzles the eye and enraptures the soul”. It was rescued from ruin in 1943 by British troops, who staged not only revues but also 30 operas.

Its debts have mounted, however, with €133,000 spent on costumes in the first three months of this year and €54,000 on hairdressing. Mr Rutelli said that he had no option but to dismiss the board – chaired by Mrs Iervolino – and put Salvatore Nastasi, a senior ministry official, in charge to “sort things out”.

Gioacchino Lanza Tomasi, the Superintendent of the San Carlo, has won praise for his attempts to raise its profile, with an acclaimed production at the start of the current season of Verdi’s Falstaff, starring Ambrogio Maestri and conducted by Jeffrey Tate, the theatre’s English musical director. Mr de Simone said that all Italian opera houses had struggled since a law was passed in 1996 that put them in the hands of semi-private foundations and reduced state subsidies sharply. But Naples suffered from a “general malaise”, with its institutions in the hands of a “powerful clique which does not face realities”.

Mario Martone, who was to have directed Rossini’s Torvaldo e Dorliska next month, said that the production faced cancellation. Gloria Mazza, spokeswoman for the 366 employees, said that although Mr Nastasi had assured them he was not an executioner they feared job losses that would be “another blow to the city”.

Mrs Iervolino said that she had toured Italy searching for wealthy sponsors to “save the San Carlo”. “If control is not handed back to us within six months I shall personally picket the Culture Ministry,” she said.

Roberto Saviano, a Neapolitan writer whose bestselling novel on the Camorra, entitled Gomorrah, is to be made into a film, said that the city’s problem was not only that it was the “world capital” of the cocaine trade but also that police were apparently powerless against the clan system.

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