|Italians took to the streets on Wednesday to protest against austerity measures [Reuters]
The Italian prime minister is bracing for a confidence vote in parliament that will determine his political future amid rifts within the government and rallies against its handling of the financial crisis.
Silvio Berlusconi addressed parliament on Thursday in defence of his government's record.
The vote of confidence was expected on Friday, Fabrizio Cicchitto, a parliamentary official for the governing party, said.
If he loses, Berlusconi will be forced to resign.
Small anti-government demonstrations erupted on Wednesday in Rome, Naples and other cities in a sign the anger is spreading beyond Italy's bickering politicians to ordinary citizens.
The government's rifts, including between Berlusconi and his finance minister, Giulio Tremonti, have been exposed for weeks over austerity measures necessary to balance Italy's budget and avoid contagion from Greece's debt crisis.
The government has modified the measures several times and drawn criticism for its lack of clear direction.
In an unusual step, President Giorgio Napolitano, a highly respected and largely ceremonial figure, demanded "credible answers'' from the cabinet and parliament alike, pointing to "the undeniable display of acute tensions within the government and the coalition".
Berlusconi, a media tycoon, has been weakened by sex scandals, defections from his coalition and legal problems. He faces separate trials in Milan on charges of corruption, tax fraud and paying for sex with a minor.
He denies wrongdoing, claiming that he is the victim of politically-driven magistrates who want to oust him from power.
The 75-year-old prime minister has dismissed any calls for his resignation and vowed to serve out his five-year mandate, which expires in 2013. His support in parliament, however, has eroded.
He suffered a defeat on Tuesday when a routine piece of legislation failed to pass the lower house by a single vote. The finance minister had missed the voting by a few seconds, but insisted later there was no political motive in his absence.
In a sign of his displeasure over the failed vote, Napolitano reminded Berlusconi that it was up to him alone to "indicate the solutions that will lead to the necessary approval" of the annual state balance sheet.
Berlusconi's allies have dismissed Tuesday's defeat as a one-off incident, saying the confidence vote will show the government still enjoys the parliament's support.
Demonstrators set up tents outside the Bank of Italy headquarters in Rome on Tuesday, singing the national anthem and yelling slogans against "the caste", a term that has taken on the pejorative meaning of a corrupted, power hungry political class.
Many of the demonstrators carried banners reading "Our Future is Not in Debt" and "More Rules, Less Speculation".
The political turmoil comes as Italy is trying to resist being engulfed in Europe's debt crisis. Last week, the Fitch ratings agency downgraded Italy's sovereign credit rating, after downgrades from Moody's and Standard & Poors, which have all cited Italy's anemic growth and high public debt.
Mario Draghi, the governor of Bank of Italy, urged the government to act more quickly to implement reforms that can spur growth.
Otherwise, Draghi warned that the rising cost of borrowing to service national debt seen over the last three months will eat up "no small part" of the austerity package approved by parliament last month.
"The goal of relaunching growth is finally largely shared, but the adoption of the measures necessary so far have banged up against apparently insurmountable difficulties."