Leading figures in Silvio Berlusconi's own party have defied him by calling on MPs to back the Italian coalition government in a confidence vote. Angelino Alfano, Berlusconi's deputy and secretary of People of Freedom, urged the party to unite behind Prime Minister Enrico Letta on Wednesday.
Berlusconi appears determined to topple the coalition, after ordering his ministers to leave the government. But amid signs it would survive, Italian markets jumped on Tuesday. The blue-chip stock index rose 2.5%. Investors also showed greater confidence in Italian bonds, with the interest rate paid to hold 10-year government debt falling as a result.
In a letter to Italian weekly Tempi, Berlusconi blamed PM Letta and President Giorgio Napolitano for failing to stop a separate vote on ejecting him from the Senate because of his recent tax fraud conviction.
“How can anyone be reliable if they... allow the main government partner to be politically assassinated by judicial means? he asked. Even though I understand the risks that I am taking on, I have decided to put an end to the Letta government.
However, Mr Alfano, Berlusconi's protégé, said: I am firmly convinced that our party as a whole should vote confidence in Letta tomorrow”. Other People of Freedom politicians also said they backed the continuation of the coalition.
PM Letta called a vote of confidence in himself after Berlusconi ordered his ministers to leave the government in protest at a rise in VAT (sales tax).
The prime minister, from the centre-left Democratic Party, accused Berlusconi of using the VAT issue as an alibi for his own personal concerns.
A committee of the Senate is due to decide on Berlusconi's expulsion this week after the Supreme Court recently upheld his conviction for tax fraud.
PM Letta's cross-party alliance was formed in April after two months of political deadlock following an inconclusive election. It was approved by 453 votes to 153.
The new prime minister vowed to turn the recession-hit economy, the third-largest in the Euro-zone, around within 18 months or face the consequences.
Berlusconi dominated Italian politics for nearly two decades before resigning in November 2011, in the midst of a storm over the failing economy. The apparent rebellion by party figures is the biggest internal challenge to his leadership since he founded the party.
The Supreme Court verdict was Berlusconi's first definitive conviction in more than two decades fighting dozens of legal cases. At 77, he is too old to serve his one-year sentence in prison, but is expected to be given house arrest or community service. He is still awaiting an appeals verdict in a separate case, in which he was found guilty of paying for sex with an underage prostitute.