He said: “I am disappointed, but we were expecting it.”
“This is the result of Berlusconi’s law, just before the elections two years ago. He created this new electoral law on purpose to create this trouble in the senate, and this is the result of it.”
Prodi had sought confidence votes in both the upper and lower houses after a small Catholic party withdrew its support for him on Monday, erasing his tiny senate majority.
He survived the first confidence vote in the lower house by 326 votes to 275 on Wednesday but lost Thursday’s senate vote.
Prodi, a 68-year-old academic known in Italy as the “professor”, had decided to go ahead with the vote after rejecting the advice of Giorgio Napolitano, Italy’s president, to step down.
Roberto Calderoli, a senator from the far-right Northern League and one of Prodi’s most acerbic critics, had predicted Prodi’s defeat.
Calderoli said: “He [Prodi] will lose the confidence vote but he will fall with a soldier’s honour for having fought to the end.”
Berlusconi’s centre-right opposition, which was beaten by Prodi in the 2006 elections, hopes Napolitano will now call early elections which it is confident of winning.
Commentators and analysts warn that holding early elections without changing the messy voting rules would merely prolong the instability which has affected Italy’s economy.
To win, Prodi needed the support of a handful of unelected life senators who have rescued him in previous votes and some elected senators would have had to have thrown him a lifeline by not showing up for the vote, lowering the quorum.
Napolitano could now ask Prodi or another senior politician or technocrat to form an interim government with a mandate for electoral reform before new elections are called.
Italy has turned to technical governments before in times of crisis and some economists see it as a positive option.