ROME -- Silvio Berlusconi, faced with mounting criticism over Italy's sluggish economy and its involvement in Iraq, resigned yesterday as premier but vowed to quickly form a stronger new Cabinet to restore confidence in his leadership.

Resigning and then immediately shuffling the Cabinet is an old strategy to use Italy's complicated political system and has been used by premiers to strengthen faltering coalitions.

Berlusconi, who had presided over Italy's longest-serving government since World War II, had so far resisted the move, sensing it would dent his image as a new-style politician. Yesterday, he suggested he would have preferred not to resign.

''One can't always get what one wants," he said, acknowledging the end of his ambition of heading Italy's first postwar government to serve an entire five-year term.

But the resignation, which he submitted to the president, is expected to enable Berlusconi to form a more solid Cabinet after weeks of infighting within his coalition, triggered by an embarrassing defeat in regional elections April 3 to 4.

Berlusconi said that all his coalition allies have ''renewed their trust" in him and demanded that he form a new Cabinet.

''I accept this challenge," he told the Senate.

It is formally up to President Carlo Azeglio Ciampi to designate a candidate to assemble a new government or dissolve parliament and call early elections. Ciampi, who begins formal political consultations today, is expected to give Berlusconi the mandate to form a new Cabinet.

Berlusconi, who is staying on as caretaker, was quoted by the Apcom news agency as saying that he expects the government crisis to be over by the end of the week. He reportedly said he will not change many ministers, but gave no details.

The resignation was welcomed by his allies, who had demanded it after the electoral defeat.

''Premier Berlusconi has been good; his speech was excellent," said Gianfranco Fini, who serves as deputy premier and foreign minister.

Fini's party, the National Alliance, had threatened to quit the government Tuesday. Such a move by the second-largest coalition partner, following the withdrawal of a smaller coalition ally, would have thrown the Cabinet into further disorder.

Berlusconi's popularity has been sagging. While his resignation was a personal defeat, the ever-smiling billionaire had his usual confident and winning tone during the Senate address.

Berlusconi appeared to appease some requests from his allies when he said the new platform would focus on aiding Italy's underdeveloped south and financially pressed families.

The economy is high on the list of worries. Last year, Italy's economy expanded by 1.2 percent, compared to an average of 2 percent in the entire 12-nation euro zone, and the government is under pressure from the European Union to contain its rising deficit.

The center-left opposition has been pressing for early elections, confident that it might be able to oust the conservatives from power as recent polls have suggested.

''If having a carbon copy of the government is the idea, it's better to give voters their say," said opposition leader Piero Fassino. The center-left opposed Berlusconi's decision to send 3,000 troops to Iraq.

© 2005 The Associated Press

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