Italy PM Monti says he will resign when budget approved

Italian Prime Minister Mario Monti announced today that he intended to resign once next year's budget is approved in parliament after Silvio Berlusconi's party withdrew its support for his technocrat government this week.

Only hours before the announcement, Berlusconi said he would run to become premier for a fifth time on a platform that attacks Monti's stewardship of the economy.

President Giorgio Napolitano is now expected to set the date for an election which must come within 70 days of the government resigning. Italy had in any case been due to go to the polls by April at the latest.

Monti's move turns the tables on Berlusconi, who seemed to have once again seized a political opportunity to keep his party in the political game just a year after being forced to resign amid a sex scandal and a debt crisis.

At a conference in France earlier, Monti, whose year in office was widely credited with restoring Italy's international credibility after the scandal-plagued Berlusconi era, warned of the threat of "populism". He said Italy should not go back to where it was when he took over for Berlusconi a year ago.

When he returned to Rome, he met Napolitano for two hours before announcing his intentions.

He warned that not approving the budget "would render more serious the government crisis, also at a European level," and said that after it is approved, his resignation would be "irrevocable".

Leaders of both Berlusconi's center-right People of Freedom (PDL) party and the center-left Democratic Party (PD), which is leading in the opinion polls, said they would pass the budget.

"Faced with the irresponsibility of the right that betrayed a commitment it made a year ago before the whole country... Monti responded with an act of dignity that we profoundly respect," said PD leader Pier Luigi Bersani.

"We are ready to approve the budget in the fastest possible manner," he said in a statement.