Italy's Berlusconi closes key deal, steps back from candidacy

ROME (AFP) - Italy's Silvio Berlusconi revived his historic alliance with the far-right Northern League on Monday and stepped back from his leadership bid in a deal to shore up support ahead of February elections.

"An agreement has been signed," Mr Berlusconi said after weeks of uncertainty over whether his People of Freedom (PDL) party could heal a rift with the League to run together in battleground regions in the north of the country.

"I was sure we'd reach a deal because a party must be realistic, and not renewing our alliance would have been bad for us, the League and Italy," he said in an interview with Telelombardia television.

The League's head, Mr Roberto Maroni, said that under the deal Mr Berlusconi would head up the coalition but would withdraw his candidacy for the premiership.