With less than a week to go to Italy’s election Silvio Berlusconi and Romano Prodi were tonight due to square up for their second and final television debate.

There was an exchange of hostilities as the contest neared, with Signor Prodi accusing the embattled Prime Minister of resorting to "fear and lies" to stave off defeat.

Despite - or perhaps because of - his unexciting avuncular style, Signor Prodi was widely held to have won the first TV duel on points in mid March. Signor Berlusconi, who prefers to hold the stage, was visibly irked by the debate format, which restricts answers to two and half minutes. He also appeared defensive.

The Prime Minister and media tycoon has since bounced back, showing flashes of his old flamboyant and combative style and hammering at Signor Prodi for allegedly planning to raise taxes. Signor Prodi denounced this as a lie "peddled by Berlusconi through his commercial television empire".

He admitted an "error in communication" in suggesting that he would restore inheritance tax, which Signor Berlusconi abolished. The tax would only be restored for "the very rich", Signor Prodi said.

Signor Berlusconi, 69, who is Italy’s richest man, spent the weekend relaxing at his luxury villa on the island of Sardinia and discussing tactics with his aides. Signor Prodi, 66, who projects a simpler life style and prefers bicycles to limousines, went strolling with his wife Flavia in the sunshine outside his Rome office with no sign of the bodyguards who habitually surround Signor Berlusconi.

Signor Berlusconi, who rose to power by applying his marketing skills and showmanship to politics, has trailed in the opinion polls since local elections which saw his Forza Italia party’s share of the vote plummet from 29 per cent to 21 per cent. Asked if he was now "selling fear" by stressing the spectre of tax rises and Signor Prodi’s reliance on the Hard Left, he replied "Yes, because the Left scares people".

However Corriere della Sera, Italy’s most authoritative newspaper, which has come out in favour of Signor Prodi, said that Signor Berlusconi’s self created image as the man who selflessly entered politics to save Italy from "the Communists" had lost its appeal.

Italians were disappointed not so much by continued corruption charges against Signor Berlusconi, or his embarrassing gaffes, as by his failure to revive the economy and make them better off since he came to power in 2001.

Signor Berlusconi accuses Signor Prodi of failing to to explain how he would pay for a proposed cut in labour costs to increase flexibility in the job market. Although polls show Signor Prodi with a five point lead, they also show that over a quarter of Italian voters are undecided.

At the weekend Signor Berlusconi said fear of a left wing victory was prompting a "flight of capital" from Italy. Signor Prodi retorted that if there was a flight of capital it was because the Berlusconi government had presided over a huge public deficit and near zero growth. He said the Berlusconi years had marred Italy with their "arrogance and vulgarity".

Signor Berlusconi promises to raise the minimum pension, cut income and corporate taxes, lower VAT rates on tourism, and offer free public transport for the elderly. Signor Prodi - whose manifesto runs to 281 pages to include all aspects of his eclectic coalition - promises credits for families with children, cuts in labour taxes and pensions reforms.

Centre Right leaders including Gianfranco Fini, the Far Right Foreign Minister, and Pier Ferdinando Casini, the Christian Democrat Speaker of the Lower House, have begun to distance themselves from Signor Berlusconi and maneouvre for the post Berlusconi succession battle.

Signor Berlusconi however said that if he lost he would not return to business, but would lead the opposition.

Signor Prodi charges Signor Berlusconi with changing the electoral system at the last minute to reintroduce proportional representation, in the hope of making him more dependent on Far Left parties.

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