Berlusconi's coalition to make peace after law row

Prime Minister Silvio Berlusconi's unruly coalition prepared to patch up its latest internal row yesterday after fierce arguments over a new immunity law pushed the government to the brink of breakdown.

The dispute broke out after Justice Minister Roberto Castelli last week invoked the new law to block an investigation into Berlusconi's business dealings, enraging centrist allies.

Berlusconi, a billionaire businessman-turned-politician, stepped in to try to put a lid on the row, calling Castelli to persuade him to back down, newspapers reported yesterday.

After his intervention, Deputy Prime Minister Gianfranco Fini was expected to tell parliament later that the government was giving the go-ahead to the investigation after all.

"We must give credit to Berlusconi for understanding the situation and for saying that we should clear misunderstandings, avoid boomerangs and let the investigation go ahead as there is nothing to fear," Fini told reporters.

Berlusconi, on an official visit to Moscow, said he had stayed out of the dispute and would continue to stay out of it.

"I am a record holder when it comes to investigations, so I am extending my lead," the prime minister joked with reporters.

He denies any wrongdoing in any of the several cases launched against him and accuses magistrates of persecuting him for political reasons, but had previously given no public sign that Castelli's proposal had anything to do with him.

Its withdrawal should pacify the centrist UDC party and stave off a motion of no-confidence in Castelli mooted by the centre-left opposition - but the row has exposed divisions in the centre-right alliance that will not be quickly patched.

"Wounds like these leave increasingly deep and visible scars in the tissue of the coalition," Sandro Bondi, spokesman for Berlusconi's Forza Italia party, told daily La Repubblica.

It is the second time in less than a month that parliament has been rocked by coalition rancour. The constant feuding risks overshadowing Italy's presidency of the European Union, which runs until December.