The president said he made the decision with 'regret', adding that it 'was made necessary by the negative outcome' of efforts by Senate Speaker Franco Marini to build an interim government tasked with reforming Italy's electoral system.

Mr Napolitano said calling early elections was as 'anomaly which will not be without consequences for the governability of the country'.

After the centre-left government of Romano Prodi was brought down by the defection of a tiny centrist party after just 20 months in power, much of the political class as well as the electorate called for an overhaul of the voting system before any new elections were held.

Mr Prodi, who co-signed the decree to dissolve parliament on Wednesday, was to convene his cabinet at 1pm (8pm Singapore time) to set dates for the polls, which Italian media say will be held April 13 and 14.

That will be just over two years after Mr Prodi defeated Mr Berlusconi in the closest election in modern Italian history.

New elections became inevitable after the failure of attempts to form an interim government to correct a voting system that is blamed for the country's political instability by giving too much clout to tiny parties.

Mr Berlusconi and his allies on the right have been clamouring for snap elections since voter surveys began favouring them by double-digit margins.

The 71-year-old billionaire media tycoon from Milan will face a new rival in the form of popular Rome Mayor Walter Veltroni, the new 52-year-old flagbearer of the left.

The new face-off makes a change from the three previous duels between the flamboyant Mr Berlusconi and his professorial arch-rival Mr Prodi, both of them now former prime ministers twice over.

With 68-year-old Prodi's political star on the wane, the centre-left has been grooming Mr Veltroni, who served as his culture minister in the 1990s, to succeed him.

However, the Rome mayor insists he is running only as the leader of the Democratic Party (DP), the left's largest formation, and not the eventual head of a coalition.

The go-it-alone stance has the far left fuming and looking for a viable 'new form of alliance,' in the words of Italian Communist Party leader Oliviero Diliberto, quoted in the daily La Repubblica.

'The DP took off with trumpets blaring saying it was going alone to the polls,' said Fabio Mussi, head of a DP splinter movement. 'If the road has opened for Berlusconi, let's at least not pave it for him,' he added.

Green party leader Alfonso Pecoraro Scanio warned, for his part: 'If the centre-left goes forward divided, Berlusconi wins, and the DP will be to blame.'

The far left will hold a series of 'programme primaries' later this month in several cities, according to Franco Giordano of the Refoundation Communist party.

Italy's political crisis came to a head on Monday as Speaker Marini threw in the towel on forming an interim government.

Mr Berlusconi, who heads the largest party on the right, Forza Italia, had refused to support Mr Marini's efforts, insisting that only early elections could end the political crisis.

The opposition leader has re-emerged as the uncontested head of the centre-right which only three months ago was ravaged by infighting. -- AFP