Silvio Berlusconi's leading political ally Umberto Bossi, leader of the conservative Northern League, has asked the prime minister to resign ahead of a crucial vote on economic reform.
"We asked him to step aside, take a step to the side," Bossi said outside parliament on Tuesday, the Associated Press reported.
The Northern League, a eurosceptic right wing party, is a partner in the ruling coalition and could be a power broker in negotiations over the future of the Italian government. The party has previously blocked economic reforms and threatened to destabilise the coalition ahead of key votes. The party's deputies were at the centre of a heated debate ahead of the eurozone leaders' summit two weeks ago.
Berlusconi is under growing pressure to resign as the international markets lose confidence in the country's ability to reform. Yields on Italian 10-year bonds hit euro-era record highs of 6.767% on Monday. Rumours that the prime minister was preparing to stand down saw markets bounce, a clear indication that investors see the scandal-hit 75-year old as a main block to reform.
The Italian parliament votes today on a financial bill in a motion that will reveal whether or not Berlusconi retains his majority. Two deputies from his party have reportedly indicated that they will oppose the government, while six signed an open letter calling for the prime minister to resign ahead of last week's G20 meeting. If all eight vote against Berlusconi, it may take his backers below the 315 needed for a majority.