Italian Prime Minister Silvio Berlusconi’s closest ally and his fiercest rival failed yesterday to resolve a government stalemate that could lead to early elections.

Northern League leader Um­berto Bossi met lower house speaker Gianfranco Fini, who has bitterly split from Mr Berlusconi, to seek a way out of an impasse that is pushing Italy towards a full-blown government crisis and likely snap polls.

Mr Bossi said after the talks there was room for a backroom deal that would see Mr Berlusconi resign and form a new government.

Asked if Mr Fini was open to that, Mr Bossi said: “Reasonably.”

But Mr Fini poured cold water on the prospect for a deal.

“Things are a lot more complicated than they way Mr Bossi is presenting them,” Mr Fini said, according to a source in his party.

Mr Fini’s loyalists said the Prime Minister must in any case make the first move and step down, something he is loathe to do.

“Fini has demanded Berlusconi’s resignation, or else we will pull out of the government,” said Italo Bocchino, Mr Fini’s most trusted lieutenant. “This is certain.”

Mr Bossi has been the 74-year-old Premier’s sole coalition ally since July when, after months of acrimonious exchanges, Mr Berlusconi expelled Mr Fini from the People of Freedom (PDL) party they co-founded in 2008.

The break-up prompted Mr Fini to set up his own party, depriving Mr Berlusconi of a guaranteed majority in the lower house of ­Parliament and virtually paralysing the executive.

Mr Fini demanded last Sunday that Mr Berlusconi resign so that a new centre-right coalition including centrists could be formed, possibly without Mr Berlusconi at the helm.

If Mr Berlusconi did lead the next government, FLI would support it only under certain conditions and with a limited legislative programme including a change in the electoral law.

He said that if Mr Berlusconi did not resign, he would pull a minister, a deputy minister and two undersecretaries loyal to him out of the government, bringing things to a head.

Mr Fini is not expected to make good on that threat until Mr Berlusconi returns from a G20 summit in South Korea tomorrow.

Bruised by a string of sex scandals, his popularity at a record low, Mr Berlusconi has made it known that he has no intention of stepping down, but most commentators say the countdown to the end of the Berlusconi era has begun.

“In my country I have some difficulties in this moment,” an uncharacteristically understated Mr Berlusconi, speaking in English, told his Vietnamese counterpart in Seoul.

The fact that Mr Berlusconi has given the outspoken Mr Bossi the task of hammering out a compromise with Mr Fini shows the growing clout of the Northern League. There is little love lost between Mr Fini and Mr Bossi, who has also ruled out broadening the coalition to the centrist UDC party.

If Mr Fini pulls his loyalists out of the government, Mr Berlusconi could ask for a confidence vote in Parliament, forcing his rival to take responsibility for pulling the plug on the executive. That would clear the way for early elections most analysts expect to take place next spring.

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