Palace talks

The talks on Tuesday, at Napolitano's Quirinal Palace in Rome, marked the last of four days of political consultations.

As head of state, Napolitano must decide whether to dissolve parliament and call elections three years ahead of schedule or give the mandate to a respected, uncontroversial figure to create an interim government in charge of changing the electoral law before any new vote.

Italian media reports suggested Napolitano was getting ready to appoint either Franco Marini, the president of the senate, or Giuliano Amato, the interior minister in Prodi's fallen coalition, to lead a caretaker government.

The centre-left, shattered by Prodi's resignation after less than two years in office, wants to delay any election.

Plea for reform

It is calling for a reform of the current proportional-representation system, which was passed in the final days of Berlusconi's government, but was later criticised even by its proponents.

The system is seen as giving disproportionate weight to small parties, thus increasing political instability.

However, Berlusconi, who held an hour of talks with Napolitano, said: "We believe there is no other way than returning to the polls and giving the county a government as soon as possible, a government that is immediately operational."

He dismissed both the idea of a transitional government and the need for the reform of Italy's electoral law.

He said: "Given the Italian political landscape today, we consider this law can immediately guarantee a majority capable of supporting a government for five years."

Napolitano has said previously that he wanted the electoral law reformed before any new parliamentary vote.

But any efforts at forming an institutional government are fruitless if no cross-party consensus is reached, and Berlusconi's stance, backed by most of his allies, appeared to leave the president little room for manoeuvring.

Berlusconi, a former prime minister, is likely to return to power in the event of an early vote, with recent polls showing as much as a 10-percentage point lead for the conservatives over their rivals.

Napolitano is expected to announce a decision on Tuesday evening or on Wednesday.