"Even though I understand the risks that I am taking on, I have decided to put an end to the Letta government," Berlusconi said in an emotional letter sent to the Catholic weekly magazine Tempi.
Berlusconi accused Letta of allowing his "political assassination through judicial means" -- a reference to his criminal conviction for tax fraud in August which triggered the current crisis.
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"I am firmly convinced that our party as a whole should vote confidence in Letta tomorrow," Alfano, who is also the national secretary of the PDL, said following marathon talks with Berlusconi.
Letta has refused to accept the resignations of five ministers from Berlusconi's party, Italy's ANSA news agency reported today, citing a close government source.
Berlusconi announced he was withdrawing the ministers from the fragile coalition presided by Letta on Saturday, who said it was a "crazy and irresponsible" act.
Alfano's comments sparked a spike in the Italian stock market as investors appeared increasingly confident that Letta's government would not fall.
Milan's index closed 3.11% higher today after closing 1.2% lower yesterday.
Berlusconi has dominated Italian politics for much of the past 20 years and once commanded absolute loyalty from his ranks. The dissent is seen by many analysts as a major blow for him.
Another once-loyal supporter, Carlo Giovanardi, a senator from Berlusconi's party, said 40 PDL senators were ready to vote for the government, which would hand Letta a large majority.
"We are staying in the PDL. The others can leave. We want to remain a moderate force," he said.
Fabrizio Cicchitto, a deputy from the party, said: "Making the government fall would be a mistake".
Cicchitto said any new government formed would be "hostile to the PDL" and would be a boon for Letta's centre-left Democratic Party, while elections in November would be "impractical".
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