GRUDGING, grim-faced and declaring that his Government was the best Italy had ever known, Silvio Berlusconi resigned yesterday, three weeks after losing a closely fought election.

His departure, with the promise “We will be missed”, paves the way for Romano Prodi, the centre-left leader, to form a new government.

A crowd whistled, jeered and shouted “Go home” as Signor Berlusconi, 69, drove from Palazzo Chigi, the Prime Minister’s office, to the Quirinal Palace to hand his resignation to President Ciampi. He later managed a smile, shaking the hand of a journalist from the leftwing paper L’Unita and asking: “Happy now?”

The resignation ends a controversial five years in which the flamboyant, populist and gaffe-prone media tycoon turned prime minister strode the world stage but disappointed Italians to whom he had promised an economic miracle. He remains caretaker Prime Minister until Signor Prodi, 66, is formally installed. President Ciampi, who stands down as head of state on May 18, has indicated that he would prefer to leave the task of nominating the next prime minister to his successor.

He is under pressure, however, to name Signor Prodi himself to reassure investors and financial markets and avoid a lengthy transition at a time when the Italian economy is suffering from zero growth. Signor Prodi said that he was ready to take office at the end of the week, and had his Cabinet list “in my pocket”.

Signor Berlusconi, who consistently refused to concede defeat after the election, vowed to mount “total” opposition to Signor Prodi’s fragile nine-party coalition, which has a wafer-thin majority in the Senate.

He added: “Prodi will not have an easy time of it, the Left is not united. We are complying because we are democratic, but we remain convinced that the majority prize has been wrongly assigned.” Signor Berlusconi still alleges that the election outcome was due to “irregularities” or even fraud and is determined to pursue a legal challenge.

Aides insisted that Signor Berlusconi would not return to running his business empire but would remain in politics. The Left alleges this is partly to protect his Mediaset television company, which Signor Prodi’s Communist allies have threatened to “slim down”.

Signor Berlusconi’s fate was sealed when the Lower House and the Senate last weekend elected new Speakers, confirming the Centre Left’s parliamentary majority. His last card failed when his candidate for Senate Speaker, the former prime minister Giulio Andreotti, was narrowly defeated.

Signor Berlusconi made history by ruling for a full term, becoming Italy’s longest-serving postwar leader. But he was criticised for failing to fulfil his promise to regenerate the economy, instead devoting much of his energy to passing laws designed to benefit his own interests and evade corruption charges.

In what must have been a bitter pill to swallow Signor Berlusconi, who built his career after entering politics in 1994 on the need to save Italy from “the Communist menace”, yesterday confirmed his resignation, as required by law, to Fausto Bertinotti, the new Speaker of the Lower House and leader of the Refounded Communist Party.

Signor Berlusconi refused to phone Signor Prodi to congratulate him even after Tony Blair and President Bush, formerly close allies of Signor Berlusconi, had belatedly done so.

Aides said that Signor Berlusconi was determined to prevent the Left winning the race for head of state — due on May 13, as well as the parliamentary election. The Left is putting up Massimo D’Alema, the former Communist Prime Minister, while Signor Berlusconi’s coalition in a surprise move asked Signor Ciampi, 85, to stand again, saying that he had been “a solid moral and institutional point of reference for the nation”. A possible compromise candidate is Giuliano Amato, the former Prime Minister, seen as a respected centrist.

Before his resignation Signor Berlusconi attended a state funeral in Rome for three Italian soldiers killed by a bomb in Iraq last week.

Times Recommends

• Henning Mankell: ‘If Wallander was alive, I wouldn’t be a friend of his’
• Secret society's skull and crossbones for sale
• Nigerian leader vanishes after medical treatment