"Undeniably the centre left has won and I think that it was the left part that won, more than the centre," said Francesco D'Onofrio, a senator from the centrist UDC party.

Pollsters said Berlusconi's House of Freedoms coalition always faced an uphill battle to win over voters who felt the ever-optimistic premier had failed to deliver on pledges to revolutionize hidebound Italy and revive the economy.

A poll by the Piepoli organization suggested the prime minister's own Forza Italia (Go Italy) party had suffered a beating, with support dropping to 20-23 per cent from 29.4 per cent in 2001.

Prodi, 66, beat Berlusconi in a 1996 general election, but his government lasted only two years before it was brought down by disgruntled communist allies.

Critics say any new government headed by the occasionally prickly Prodi will suffer a similar fate because of the gaping ideological divide within his multi-party alliance.

Prodi will certainly have a smaller parliamentary majority than Berlusconi due to a change in the electoral system that was rushed into law late last year in a move critics said was designed to hobble any centre-left administration.

But Prodi insisted throughout the campaign that his coalition could survive a full five-year term, noting that unlike in 1996 his allies had signed up to a 289-page manifesto that will serve as a road map for any centre-left government.

The manifesto pledges to cut labour taxes, provide bigger handouts for families with children, reintroduce an inheritance tax, scrap plans to raise the age of retirement to 60 and launch a crackdown on tax evasion.

On foreign policy, Prodi has vowed a swift withdrawal of Italian troops sent to Iraq by Berlusconi, who is one of U.S. President George W. Bush's closest allies in Europe.

Analysts say Prodi is bound to alter Italy's diplomatic priorities, putting Europe rather than the United States first.

If Prodi's victory is confirmed, he will inherit the unenviable task of cutting the world's third-largest national debt while trying to breathe life into an economy that grew an average of just 0.6 percent a year under Berlusconi.

Standard and Poor's ratings agency urged the next governemnt to move swiftly to reform Italy's finances.