In this photo released by the Italian Presidency Press Office, President Giorgio Napolitano, left, greets Premier Romano Prodi.
Italy's president holds crisis talks with political leaders on Thursday to see if Romano Prodi, who resigned as prime minister after nine months in power, can still head a government or must be replaced.
Prodi, who won the narrowest election in Italy's post-war history last year, quit on Wednesday after he was defeated in the Senate on foreign policy -- a constant source of friction in his nine-party, Catholics-to-communists coalition.
"Comrades, all go home," crowed the headline in right-wing daily Il Giornale run by the brother of Silvio Berlusconi, the tycoon former prime minister who hopes to return to power if new elections are held.
Under the constitution, President Giorgio Napolitano now must find a way out of the impasse.
He will spend Thursday in consultations with party and parliamentary leaders -- a process one newspaper called a "Russian roulette" for Prodi, as the unpredictable result will determine his political future.
There are three main scenarios.
If Napolitano finds enough support for Prodi among centre-left parties, he could ask him to either form a new government or go to parliament with his present cabinet for a confidence vote; a victory would allow him to remain in office.
If support for Prodi is not strong enough for him to carry on as prime minister, Napolitano could ask someone else, possibly Interior Minister Giuliano Amato, to form a caretaker government of experts with cross-party backing.
If no agreement is found on who should be prime minister, Napolitano would be forced to dissolve parliament and call early elections, even though this option appears unlikely for now.
WEAK AND VULNERABLE
Analysts said any Prodi government would be extremely weak and vulnerable to bitter infighting among its allies, who disagree on just about everything from Italy's military missions abroad to gay rights.
"Even if there is another Prodi government it would be hanging by a thread and would not last long, as the reasons for tension abound," said Gianfranco Pasquino, political science professor at the Bologna centre of John Hopkins University.
The Italian bourse was unaffected by the news. Milan's S&P/MIB index opened 0.5 percent higher at 42,511 points, in line with the DJ 600 Stox index.
Credit rating agency Standard & Poor's which cut Italy's rating to "A-plus" from "AA-minus" last October, citing the weakness of the country's multi-party coalition government.
"The prime minister's tendering his resignation, even if not prompted by economic issues, confirms the validity of that scepticism," S&P said. It said the political crisis did not now effect its ratings.
Prodi, 67, was heading the 61st Italian government since 1945. After his election last April, he enjoyed a brief honeymoon but his popularity soon plummeted as he pushed through a deficit-cutting 2007 budget to bring Italy in line with European Union requirements.
Despite continued bickering within his coalition, his resignation on Wednesday came as a surprise.
The vote in the Senate was only intended as a motion of support for the government's foreign policy, but Foreign Minister Massimo D'Alema turned it into a test on the executive's strength, giving Prodi little choice once the motion failed to pass.
Prodi only has a one-seat majority in the Senate, and the revolt of two leftist senators in his coalition was enough to put the government in a corner.
It was deja vu for Prodi, whose last spell in power almost a decade ago was also cut short by far-left coalition allies. This time they rebelled over keeping Italian troops in Afghanistan and allowing the expansion of a U.S. military base in Italy.