Berlusconi's rivals fail to break the deadlock

The Italian Government was last night left in a state of paralysis with its majority gone, but with no one apparently willing to pull the plug, after a last-ditch attempt at bridge-building by Silvio Berlusconi appeared to fail.

After losing three parliamentary votes on immigration on Wednesday, the beleaguered premier sent in his most senior coalition ally to thrash out a deal with bitter enemy Gianfranco Fini, whose rebel faction has cost the Prime Minister his majority.

But if Mr Berlusconi hoped pugnacious Northern League leader Umberto Bossi would win concessions from Mr Fini he was sorely disappointed. Mr Fini repeated his calls for Mr Berlusconi to quit.

According to the ANSA news agency, Mr Bossi asked Mr Fini how serious he was about demanding Mr Berlusconi's resignation. It quoted Mr Fini, the lower house speaker saying in response: "I'm awaiting a formal answer from Berlusconi. And as I have said, I will withdraw our ministers if the answer is negative."

Mr Fini called for Mr Berlusconi to step down following continuing allegations of sexual impropriety and abuse of office. It has been suggested that at the meeting, Mr Bossi offered a deal that would have seen Mr Berlusconi resign only to form a new government, possibly giving Fini's loyalists more cabinet posts.

But despite saying the meeting had been fruitless, the Fini faction made no indication they would back the opposition Democratic Party in a vote of no confidence to put Mr Berlusconi's administration out of its misery.

Pundits say the extra political uncertainty brought about by immediate elections would put further pressure on Italy's fragile economy – and that no one wants to be blamed for bringing new elections.

This was underlined by Mr Bossi's comments after yesterday's meeting. A managed crisis is better than going into "the darkness," he told reporters.

The timing of the current crisis is complicated by the need to pass the 2011 budget law, which parliament must approve by the end of the year.

Failure to do that may rattle the markets. Italy weathered the financial crisis better than most of its European peers, but it has one of world's biggest deficits.

The usually reserved head of state, President Giorgio Napolitano, added his voice to the concern that the country was now rudderless and in a state of "great difficulty and turbulence".

Meanwhile, Mr Berlusconi finally admitted yesterday that he had "a few problems". He made the remarks to his Vietnamese counterpart after arriving in Seoul for a G20 meeting, while back at home allegations about his private life continued to be aired.

The sex scandal widely seen as the final straw for Mr Fini, the tale of Karima el Mahroug, a 17-year-old belly dancer, who attended one of Mr Berlusconi's sex parties, has refused to die down.

Interior Minister Roberto Maroni said earlier this week that police had acted correctly in releasing the 17-year-old in May this year when she had been held on theft charges, following the personal intervention of the Prime Minister. Mr Berlusconi told Milan police that the Moroccan runaway was the granddaughter of the Egyptian president Hosni Mubarak.

But Milan's juvenile crime magistrate Annamaria Fiorillo insisted that she had not given permission for the 17-year-old's release. She said: "I told them that if she's the granddaughter of President Mubarak then I'm Queen Nefertiti."

And the head of the parliamentary security committee, Massimo D'Alema, repeated his demand that Mr Berlusconi come before it to answer questions following the emergence of a new video apparently showing call-girls being whisked into his mansion at Arcore without security checks.