By Stephen Brown and Philip Pullella
In a dramatic sequence of events even by Italian standards, Prime Minister Romano Prodi resigned last month after coalition allies defected, attempts to set up an interim government failed and Berlusconi's calls for an immediate election prevailed.
His rival will be 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.
Now caretaker prime minister, Prodi sees President Giorgio Napolitano at 10:30 a.m. British time to counter-sign the decree dissolving parliament some three years ahead of schedule. Prodi's cabinet will then set a date for voting, likely to be April 13 and 14.
While industry urges politicians to bury their differences and work in the country's interests at a time when business and consumer confidence has sunk, growth is cooling and inflation is on the rise, parties were already manoeuvring for the election.
One priest urged the Roman Catholic country to avoid making the campaign "a time to insult and humiliate the adversary".
Many economists say another government elected under current electoral rules will prove just as unstable as Prodi's, who was undermined by constant bickering between centrist and leftist allies. But another free-spending Berlusconi government could undo Prodi's work on cutting the budget deficit.
(Editing by Ralph Boulton)
