Berlusconi's government wins a brief respite

(AP)

Silvio Berlusconi's embattled government was set to stagger on last night after a coalition ally withdrew its threat to sink the administration.

The development gives the embattled 74-year-old premier a brief respite as he prepares to resume his battle with prosecutors over lurid sex and corruption allegations.

The right-wing Northern League had said it would force fresh elections and oust Mr Berlusconi if parliament rejected a new law that gave local governments greater taxation powers. The controversial plans, which critics say are aimed at cutting funding to the poorer southern part of the country, failed to pass a crucial committee vote after 15 opposition parliamentarians on the 30-member panel voted against it.

After emergency talks with the Finance Minister, Northern League leader Umberto Bossi emerged to say that there would not be immediate elections. Senior party figures said at the weekend that if the plan did not pass, it would pull out of the ailing coalition.

But Enrico La Loggia, the member of Mr Berlusconi's PDL party who heads the committee, said the government would still be able to activate the legislation through a decree, as the premier's supporters scrambled to placate his powerful, coalition ally.

So Mr Berlusconi's government, which now has a single-figure majority in the lower house, looks set to stagger on for the time-being.

"Bossi's turn-around just shows that everyone is frightened of an election," analyst Professor James Walston, of the American University in Rome, said. "Berlusconi is worried that he has lost support because of the scandals, and now more people are starting to realise that the Northern League's plans might mean higher taxes. "Italy is stuck in this sclerotic, decaying state."