Italy's Prime Minister Silvio Berlusconi attends a session at the Parliament in Rome Sept 22, 2011. [Photo/Agencies]

ROME - Italy's Prime Minister Silvio Berlusconi on Sunday rejected opposition and lobby groups' calls for the government to resign over the country's economic woes and said the ruling centre-right coalition was solid and would push on with reforms.

Pressure rose on Berlusconi this week after Standard and Poor's cut Italy's credit rating by one notch and warned of a deteriorating growth outlook, prompting widespread criticism of the government and daily calls for it to step down.

While Berlusconi's coalition has been plagued by infighting and policy disagreements, the prime minister himself is battling a widening prostitution scandal that has further dented his popularity and fuelled opposition outrage.

"We can't be controlled by the expectations of the media and the opposition," Berlusconi said by telephone to a rally of his People of Freedom (PDL) party on Sunday.

"We will not resign unless there is a vote of no confidence in parliament, which we don't see happening."

He said the government would continue as a "solid and cohesive" majority and would carry out its reform plan, adding that it would examine structural measures to boost growth next week.  

Under mounting pressure to cut its 1.9 trillion euro debt pile - 120 percent of gross domestic product - the government pushed a 59.8 billion euro austerity package through parliament this month, pledging to balance the budget by 2013.

But it is now being urged to adopt further reform to tackle the underlying problem of persistent stagnant growth in the euro zone's third largest economy and stave off a market crisis that threatens to send its debt sliding out of control.

Italy's borrowing costs are once again close to levels that prompted the European Central Bank to prop up Italian government bonds with purchases last month.

The head of Italy's main employers' federation Confindustria said earlier this week that serious and possibly unpopular reforms need to be adopted immediately or else the government should step down.  

Business daily Il Sole 24 Ore, which is controlled by Confindustria, ran a front page editorial the following day calling on Berlusconi to quit in the interests of the country if he cannot handle the debt crisis.

 

Emergency government

Opposition parties kept up the pressure on Sunday, as the leader of the centre left Democratic Party Pier Luigi Bersani suggested forming an emergency unity government.

"The hardest step in the post-war period lies ahead of us. The worries of Italians have become the worries of the world. We face difficult choices which will become even more difficult with every day that passes without a change," he said.

A poll in Sunday's Corriere della Sera showed that only one in five Italians are in favour of the government continuing in power, and even 20 percent of voters for Berlusconi's PDL party think it's better if the 74 year-old premier steps down.

Berlusconi narrowly avoided embarrassment on Thursday when parliament voted against allowing the arrest of a former aide to Economy Minister Giulio Tremonti on corruption charges.

But grumbling within the ruling majority over Tremonti's absence at the vote added to signs of government disarray.

Berlusconi is already caught up in a variety of legal and sexual scandals and this week Milan magistrates filed a request to charge him for leaking transcripts damaging to a political rival to Il Giornale, a newspaper owned by his brother, in connection with a 2005 takeover battle.

On Saturday, a judge in Perugia ruled that 18 people including a former associate of the prime minister should stand trial in another high profile corruption case, which could further dent the image of Italy's ruling group.