Berlusconi drops law that helped his firm

The Italian Prime Minister, Silvio Berlusconi, has been forced to make a humiliating U-turn after aspects of new legislation were condemned across the political spectrum for appearing tailor-made to help his business empire.

Small print buried in the finance ministry's new austerity package would have allowed Mr Berlusconi's Fininvest holding group to suspend a €750m (£670m) compensation payment to rival press baron Carlo De Benedetti. But in the face of the outcry from opposition MPs, judicial organisations and even members of the government, Mr Berlusconi announced that the offending paragraph would be deleted from the finance package, "to avoid polemic". The paragraph dealt with delaying compensation payments of more than €20m in civil cases ahead of Supreme Court rulings.

With the offending clause removed, President Giorgio Napolitano signed the €47bn austerity package yesterday. According to reports, the paragraph was not present in the version drafted by the Treasury, but appeared in the one delivered to the President from the Prime Minister's office. Mr Berlusconi continues to cling to power, thanks largely to the absence of a credible opposition, but his poll ratings are at an all-time low.

In June, Italians turned out in large numbers in referendums to repeal key Berlusconi-era legislation, including another self-serving law that allowed him to avoid court appearances. He is currently facing criminal charges in three trials.