Updated: Berlusconi sweeps back to power in Italy election

Silvio Berlusconi has won his third Italian election with a bigger than expected swing to the centre right, but the media magnate said it would not be easy to solve deep economic problems.

With Berlusconi's victory clear on Monday, centre-left leader Walter Veltroni called the 71-year-old to concede defeat. Vote-counting was close to completion on Tuesday.

After two years in opposition, Berlusconi is expected to return to Rome from his home in northern Italy later on Tuesday, although for procedural reasons he is unlikely to be appointed prime minister before early May.

"Berlusconi's triumph" was the headline in Italy's leading Corriere della Sera. La Stampa said: "Berlusconi's Third Time." A strong mandate should enable Berlusconi to push reforms through parliament, but many Italians are disillusioned with politics and doubt any government can quickly cure the ills of the European Union's fourth-largest economy.

"The months and years ahead will be difficult and I am preparing a government ready to last five years," Berlusconi told state television in a live phone call on Monday night. He said his priorities were settling the future of state-controlled Alitalia, which the outgoing administration was struggling to privatise, and clean up a long-standing garbage crisis in Naples.

Berlusconi's pledges include cutting taxes while reducing public debt, liberalising the economy and getting tough on crime. But critics say he failed to carry out pledges to revolutionise Italy when he was prime minister for seven months from April 1994 and from 2001-2006.

With counting nearly over, results gave Berlusconi a 101-seat majority in the 630-member lower house and an advantage of 41 seats in the Senate, which has 315 elected and seven lifetime senators. That contrasts with the two-seat Senate majority that the last government had under Romano Prodi, who resigned in January 20 months into his five-year term.

Berlusconi had set his sights on a 20-seat majority in the Senate.

A surprise winner in the election was Berlusconi's junior coalition partner, the anti-immigration Northern League which doubled its result over the 2006 election to around 8 percent. That result will help strengthen Berlusconi's majority, but analysts said it might give the League 'kingmaker' powers.

"They are going to raise their price for cooperation," said Gian Enrico Rusconi, a politics professor at Turin university. "I don't think a Berlusconi government will be capable of pushing through the reforms that Italy needs. The Northern League is a protectionist party." Berlusconi promised the League at least two cabinet seats.

The election win means Berlusconi, an ally of U.S. President George W. Bush, will host the third G8 summit of his career when the leaders meet in Italy in 2009. Berlusconi said he wanted Franco Frattini, currently in charge of justice and security policy at the European Commission, for foreign minister and that Gianfranco Fini, his last foreign minister, would preside over the lower house of parliament. Giulio Tremonti is likely to be named economy minister, Berlusconi has said.

The big loser was the left. Excluded from Veltroni's Democratic Party, the Rainbow Left, made up of communists and greens, fared so badly it is not seen winning any seats. With many smaller parties facing a similar fate, Christian Democratic chief Pierferdinando Casini said parliament may have only five parties, compared with some 20 last time -- a major turnaround for Italy's traditionally fragmented politics.