Italy's president was due to dissolve parliament on Wednesday ahead of snap elections, likely in mid-April, that could mark a return to power of media magnate Silvio Berlusconi.

President Giorgio Napolitano held talks with the speakers of both houses of parliament on Tuesday - the penultimate formal step mandated by the constitution before calling elections.

Caretaker Prime Minister Romano Prodi was due at the presidential palace at about 1030 GMT to counter-sign the presidential decree dissolving parliament some three years ahead of schedule.

Then Prodi was to hold a cabinet meeting to decide the timing of the two-day elections, with April 13-14 seen as the most likely dates.

Italy plunged into crisis after Prodi was forced to quit last month by defections in his centre-left coalition.

Napolitano had asked the speaker of the Senate to see if he could muster enough support for a temporary government to reform the electoral system.

But Berlusconi, 71, sensing a return to the post of prime minister he has held twice before, and other centre-right party leaders, demanded a snap election.

The centre right has had a consistent lead in surveys of voter intentions, ahead of the centre left by as much as 16 points by some estimates.

The centre left will be led at the polls by Rome's 52-year-old mayor Walter Veltroni, who had supported an interim government to change voting rules that were widely blamed for the fragility of Prodi's government, Italy's 61st since World War Two.

INSTABILITY

Many economists say another government elected under current electoral rules will prove just as unstable as Prodi's, who had been in power for only 20 months and was undermined by constant bickering between Catholic and communist allies.

Some analysts also worry another free-spending Berlusconi government will undo the centre-left's work on cutting the budget deficit.

With data released on Tuesday showing soaring energy and food prices had pushed inflation to a decade high in January, consumers' dwindling buying power will be a central election issue, and politicians will be tempted to promise generous wage increases or tax cuts.

Prodi won the 2006 vote by the narrowest margin in Italy's modern history. He was eventually forced to quit when the defection of a small Catholic party erased his razor-thin majority in the Senate.

His government's instability resulted largely from voting rules introduced by Berlusconi in 2005.