Chaos hits Italy as Berlusconi ministers quit

Former Italian leader Silvio Berlusconi has withdrawn his ministers from the government, effectively bringing down the country's fragile ruling coalition.

The move leaves the eurozone's third-largest economy in chaos and was branded a "crazy and irresponsible act" by prime minister Enrico Letta.

Talks will now start to find a parliamentary majority to back a new cabinet and avoid another election - just seven months after the last one.

Berlusconi had earlier encouraged the five ministers in his centre-right People of Freedom (PDL) party to resign over an increase in sales tax.

He said they should not be "complicit in the latest vexation imposed on Italians by the left".

"The prime minister's decision yesterday to freeze government action, thus leading to the rise in the VAT, is a serious violation of the government pact," he said.

The move comes just days before a senate committee is expected to strip him of his seat over his conviction last October for tax fraud.        

Letta hit back, saying: "To try to justify his crazy and irresponsible act, aimed fully at protecting his personal interests, Berlusconi is ... using the VAT as an alibi."

"Italians will recognise such a big lie... and return it to the sender."

The relentless political jockeying that has defined Letta's five-month tenure has already thwarted efforts to push through important reforms Italy needs to emerge from a two-year recession, a decade-long economic lethargy, a 2-trillion-euro public debt and youth unemployment of around 40%.

The resignations will delay those reforms even further.

Italian Labour Minister Enrico Giovannini told Rai state television: "So many measures we were working on now risk being set back.

"On Monday our borrowing costs are going to rise by many points."