By Stephen Brown and Philip Pullella
ROME (Reuters) - Italy called a snap election for mid-Aprilon Wednesday, heralding the possible return to power of mediamagnate Silvio Berlusconi who has a solid poll lead over thecollapsed centre-left coalition.
In a dramatic sequence of events even by Italian standards,Prime Minister Romano Prodi resigned last month after hisallies defected. Attempts to set up an interim governmentfailed and Berlusconi's calls for an immediate electionprevailed.
Berlusconi, the 71-year-old owner of AC Milan soccer club,resisted President Giorgio Napolitano's bid for cross-partysupport to reform the messy election rules before a new vote.
"It is my regret today to have to call voters back topolling booths without those reforms having been approved,"said Napolitano after he and Prodi, now caretaker premier,signed a decree dissolving parliament three years ahead ofschedule.
The cabinet met afterwards to set the date for voting asApril 13-14, near local elections which could be broughtforward to "reduce the cost and inconvenience", Prodi said.
Berlusconi, the Forza Italia leader who has been primeminister twice before, is consistently ahead of the fragmentedcentre left in opinion polls, by as much as 16 points.
His rival will be Rome's 52-year-old mayor Walter Veltroni,who had supported an interim government to change voting rulesthat were widely blamed for the fragility of Prodi'sgovernment, Italy's 61st since World War Two.
While parliament has been dissolved about nine timesbefore, only one has been shorter-lived than the 20-monthlegislature that gave Prodi such a rough ride after he won theclosest vote in Italy's modern history.
The 68-year-old former European Commission president, twicevictorious over Berlusconi in elections and twice brought downby fickle allies -- communists in 1998, now a Catholic party --confirmed he would not be running for re-election.
TIME FOR INSULTS
While industry urges politicians to bury their differencesand work in the country's interests at a time when business andconsumer confidence has sunk, growth is cooling and inflationis on the rise, parties were already manoeuvring for theelection.
Berlusconi's centre-right coalition was trying to recruitthe small Catholic party whose defection sank Prodi, while theleft voiced alarm at Veltroni's decision that his DemocraticParty would ditch its allies and run alone.
The "Rainbow Left" group of communists and Greens urged themayor to rethink his solo strategy and avoid "handingBerlusconi victory on a silver platter".
Veltroni, a former communist, said it was "time to take arisk", though he was open to parliamentary alliances later onwith "the reform-minded left but not the radical left".
If he persists, the Rainbow Left will field its owncandidate, speaker of the lower house of parliament FaustoBertinotti -- the communist who brought down Prodi in 1998.
One priest urged the Roman Catholic country to avoid makingthe campaign "a time to insult and humiliate the adversary".
Father Antonio Rungi told Catholic news agency SIR that theright and left, Catholics and secularists, should "overcometheir perennial conflicts" and campaign constructively.
Many economists say another government elected undercurrent voting rules will prove just as unstable as Prodi's,who was undermined by constant bickering between centrist andleftist allies. But another free-spending Berlusconi governmentcould undo Prodi's work on cutting the budget deficit.
With inflation hitting a decade high in January, consumers'dwindling buying power will be a campaign issue and politicianswill be tempted to promise generous wage increases or tax cuts.
Berlusconi's spokesman Paolo Bonaiuti promised a "calm andconstructive election campaign" focusing on issues like "risingprices and housing".
(Writing by Stephen Brown; additional reporting by RobinPomeroy, Francesca Piscioneri and Paolo Biondi; Editing byRalph Boulton)