Berlusconi rules out election bid

"I will resign as soon as the law is passed, and, since I believe there is no other majority possible, I see elections being held at the beginning of February and I will not be a candidate in them," he said.

While Berlusconi's party wants fresh elections, the opposition wants a national unity government.

It is expected that Italy's parliament could approve by the end of the month a package of reforms to shore up the economy, which is badly affected by the Eurozone debt crisis.

But it will only be after the budget measures are passed that the Italian president will begin consultations with the political groups on the way forward.

BBC Europe editor Gavin Hewitt, in Rome, says it is clear that political difficulties lie ahead.

And even if the present crisis ebbs, the fundamental problems remain - a country of anaemic growth and a debt mountain of €1.9tn a BBC correspondent adds.

Meanwhile, an EU team is due in Rome on Wednesday to begin monitoring how Italy plans to cut its soaring debt burden.

Economic Affairs Commissioner Olli Rehn said he would present the findings at the end of November, calling the situation in Italy "very worrisome".