SILVIO BERLUSCONI quit as Italian Prime Minister last night in a desperate attempt to stay in power.

His resignation will not trigger a general election, but it will give him the chance to form a new Government with a revised programme capable of surviving a confidence vote in the Italian parliament.

The move will further undermine Signor Berlusconi’s political standing and dashes his hopes of becoming the first Italian Prime Minister since the Second World War to lead a single government for a full five-year term.

Under the Italian system, if a government is re-formed, it is deemed to be a new administration rather than a continuation of the old one.

An election is not due until next year, but yesterday some Italian commentators were predicting already the end of the Berlusconi era.

The crisis within Signor Berlusconi’s ruling coalition of the Centre Right was triggered by its crushing defeats in regional elections at the beginning of the month.

Last Friday the smallest of the coalition’s four parties, the Union of Christian Democrats (UDC), withdrew its four ministers, including Marco Follini, the UDC leader and Deputy Prime Minister. It accused Signor Berlusconi of failing to invest enough in the impoverished South of Italy.

The post-Fascist Alleanza Nazione, the Government’s second-biggest party, led by Gianfranco Fini, the Foreign Minister, threatened to follow suit, complaining that Signor Berlusconi had made too many policy concessions to the separatist-minded Northern League, led by Umberto Bossi.

Facing possible defeat in a confidence vote that had been scheduled for today, Signor Berlusconi went before the Italian Senate yesterday to announce that he would resign and form a new Government with the same four parties but a revamped programme.

Signor Berlusconi acknowledged the scale of the coalition’s defeat in the regional elections. They had “sent a signal of malaise, which, in its magnitude, had a clear significance”, he said.

He pledged that his new government’s programme would “protect the purchasing power of families, to support our businesses and to ensure renewed and certain development in the South”.

After offering his resignation to President Ciampi, Signor Berlusconi, looking drawn, said that consultations on reshuffling his coalition would begin today and should be completed by midday tomorrow. The new government will then face a vote of confidence in Parliament.

Signor Berlusconi insisted that his Government, elected in 2001, had a mandate to govern until 2006 “and it will do so”.

He put a brave face on his disappointment, telling the Senate: “With your confidence and your support, we have written important pages in our country’s history.

“With your confidence and your support, I am sure we will write many more.”

Signor Berlusconi’s slump in popularity comes after a perceived failure to implement economic reforms or to carry out an election promise to use his entrepreneurial talent as Italy’s foremost media tycoon to raise living standards.

Recent tax cuts have had little impact. Italy’s economy expanded by just 1.2 per cent last year and the European Union is demanding that it cut its swelling budget deficit.

He has also faced widespread opposition to Italy’s military presence in Iraq and has been repeatedly distracted by corruption charges.

In the regional elections, the centre-left Opposition, led by Romano Prodi, former President of the European Commission, won 11 of the 13 regions up for re-election and garnered 54 per cent of the vote.

If Signor Berlusconi fails to hold the coalition together despite the reshuffle, Italy is likely to face an early election in the summer.

However, the initial reaction of Signor Berlusconi’s rebellious coalition partners to his promise of a new new programme was positive.

Signor Fini said: “The Prime Minister was good. He made a great speech, with a strong emphasis on the values of the coalition.”

The second-longest government, from August 1983 to June 1986, was led by Bettino Craxi

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