Italy's Prime Minister Silvio Berlusconi has hit back at his critics, saying he is far and away the best leader in Italian history and has never considered resigning over scandals concerning his private life.

In a spirited performance even by his own standards, the 72-year media tycoon also attacked Spanish daily El Pais for its critical coverage, denied paying for sex and said a prostitute who taped an encounter with him could face 18 years in prison. "I sincerely believe I am by far the best prime minister Italy has had in its 150-year history (since unification in 1861)," Mr Berlusconi said in televised news conference in Sardinia with Spanish Prime Minister José Luis Rodriguez Zapatero.

In answer to a reporter from El Pais, he dismissed as "calumnies" reports he had benefited from a prostitution ring and said he was the "victim" of escort Patrizia D'Addario who made tapes of what she said was a night spent with him.

Mr Berlusconi, whose wife is seeking a divorce over his womanising, has never denied sleeping with Ms D'Addario but has said he did not pay her and did not know she was a prostitute.

"Never in my life, not even once, have I had to pay for a sexual encounter," Mr Berlusconi said. "And I'll tell you why: for someone who loves to conquer, the greatest joy is the conquest, so I ask, 'if you pay, what joy can there be?'"

This philosophy helped to explain "why Italians like me and I have 68.4 per cent of approval and admiration", said Mr Berlusconi, who has been elected three times and is now the longest-serving leader in Italian post-war history.

When Mr Berlusconi apologised to Mr Zapatero for his lengthy answer, the Spanish leader said there was no need and it was "very interesting".

For the first time Mr Berlusconi threatened to take legal action against Ms D'Addario, saying she had committed four crimes which could carry a total of 18 years imprisonment.

Ms D'Addario, responding in a short statement issued by her lawyers, challenged Mr Berlusconi to a "public debate either about our specific affair or more generally about relations between men and women, techniques of conquest, sex and power".

Mr Berlusconi's lawyer is suing newspapers in Italy and abroad for libel over reports that, among other things, women were paid to attend and in some cases have sex at his parties.

Mr Berlusconi, who in Italy is normally only asked about his private life in pre-prepared interviews with reporters from his own media empire, said El Pais was "losing credibility" by attacking him and seemed to suggest it might go bankrupt.