|Giuliano Pisapia won the mayorship in Milan, which has been a stronghold of conservatives for the past 18 years [AFP]
The Italian prime minister has acknowledged his centre-right party has suffered defeats in local elections in his political stronghold of Milan and in the southern city of Naples.
Speaking to reporters on Monday during a visit to Romania, Silvio Berlusconi said: "This time we didn't win, but we continue. I am a fighter. Any time I have lost, I tripled the effort."
Berlusconi's administration has been beset by corruption allegations, which he denies. He also faces a trial in Milan in a prostitution scandal.
Observers say the election results could undermine his government's stability and his leadership.
Berlusconi had campaigned hard ahead of the local elections and urged Italians to go to the polls to signal their support for his conservative coalition government in Rome.
Final results from the run-off elections held on Sunday and Monday appeared to support recent opinion polls that have shown his popularity slipping.
In the Naples run-off, the leftist candidate Luigi de Magistris, a former magistrate, won by a landslide with 65 per cent of the vote, compared to 35 per cent for Berlusconi's candidate, Gianni Lettieri, according to the final returns.
The centre-left has long controlled Naples, but Berlusconi had been hoping to take control of it as the city grapples with a long-standing garbage collection crisis and high unemployment, especially among youths.
The prime minister had repeatedly vowed to clean up the city's streets from piles of garbage and sent soldiers to do the job just before the vote.
"This vote marks a clear defeat of the right, a strategic defeat," said Stefano Folli, a senior political analyst. "It gives the sense that Berlusconi's political season is drawing to a close," he said. "Let's see if he will be capable of handling his own succession."
An opposition candidate also won the race for mayor in the Milan suburb of Arcore where Berlusconi has a villa, dealing a defeat to a Northern League candidate - an embarrassment for the Italian leader if not a politically significant race.
Milan, Italy's financial and fashion capital and Berlusconi's own power base, had been run by conservative mayors for almost two decades.
Critics have said most of Berlusconi's energy has been involved defending himself from charges that he paid for sex with an underage Moroccan teenager and then used his office to try to cover it up.
The government has been criticised for not taking on tough reforms to help stimulate growth. That was one of the reasons that Standard & Poor's recently downgraded the outlook for Italy to negative.