Italy's government was on the brink of collapse on Monday as Prime Minister Silvio Berlusconi prepared to meet President Carlo Azeglio Ciampi to tell him whether he still had a majority or intended to resign.

The future of Berlusconi's centre-right government has been in doubt since the centrist Union of Christian Democrats (UDC) walked out on Friday demanding major policy changes after the coalition suffered heavy losses in regional elections.

On Monday UDC leader Marco Follini was meeting with Berlusconi at his Rome residence in what was seen as a make-or-break attempt at agreement.

Berlusconi's Forza Italia (Go Italy) party said on Sunday that a snap general election a year ahead of schedule was the only choice if the UDC refused to come back into the government.

"The time has come for taking responsibility ... If support is not given to Prime Minister Berlusconi's government, we will have to return to the voters," Forza Italia said in a statement.

NEW CABINET

It seemed increasingly likely Berlusconi would be forced to resign, at least temporarily, to present a new cabinet to the president and parliament.

This was part of Follini's original demands which Berlusconi at first rejected. But as relations worsened it looked unsure whether the UDC could be coaxed back, making snap elections as early as June a more concrete possibility.

"The current government is like a football team which has to come back from two goals down 15 minutes from the final whistle," said Gianni De Michelis, leader of the New Socialists, a minor party which quit the government along with the UDC.

As Berlusconi grappled with political crisis, the International Monetary Fund warned Italy that sound economic policy and fiscal restraint must remain its top priority.

"Italy, above all in a period of political uncertainty, should formulate its economic policies with the maximum credibility and stability," Alessandro Leipold, IMF mission chief for Italy, told Reuters in an interview.

As the crisis came to a head, Culture Minister Giuliano Urbani of Forza Italia said he would not be available in any new Berlusconi government, in protest at the "pitiful manoeuvres" currently going on in the coalition.

Source: Agencies