Italian Prime Minister Silvio Berlusconi faced a fresh crisis in his fractious coalition as a party threatened to walk out of the government today if the justice ministry continued to block an inquiry into alleged tax fraud by companies owned by Berlusconi.

The Centrists and Christian Democrats (UDC), which has also won support from President Carlo Azeglio Ciampi, has given this evening as the deadline for a response from the justice ministry.

This latest crisis caps a tumultuous first month for Italy as the president of the European Union.

Doubts about the suitability of the media tycoon to assume the presidency were widespread even before Rome took up the rotating office on July 1, owing to the numerous legal questions hanging over Berlusconi's head.

But they were intensified when Berlusconi suggested a German EU lawmaker go for the film role of a Nazi concentration camp guard in an address to the EU parliament, unleashing a furious diplomatic row with Berlin that still casts a shadow over the his presidency.

The justice ministry is headed by Roberto Castelli of the Northern League, the xenophobic party, which lies at the heart of most of the rows within the four-way center-right coalition.

Castelli has so far refused requests from investigating magistrates for more information on Berlusconi's business dealings to be sought from Swiss and US authorities.

So far Berlusconi has nonchalantly dismissed the current row as no more than petty squabbling, even though some of his aides are said to be concerned at the toll the constant infighting is taking on his health.

"They're not serious," Berlusconi said of the UDC in an interview published in La Stampa and La Repubblica newspapers at the weekend.

"It's probably because of the heat".

This is by no means the first time the coalition allies have been at pistols drawn, especially after the disastrous performance by the center-right in local elections in May and June.

Berlusconi, who described the constant infighting as "just the kids letting off steam", remains the uncontested leader of the House of Freedoms coalition and as Italy's richest man has the added weapon of being its main financial backer.

However both the UDC and the National Alliance of Deputy Prime Minister Gianfranco Fini have fundamental objections to the Northern League and make no attempt to disguise their desire to see the party and its leader Umberto Bossi out of government.

Bossi recently caused outrage within the coalition by appearing to advocate the use of cannons to stop illegal immigrants from reaching Italy's shores.

Italy's left-wing opposition has been looking to take advantage of the problems within the coalition, but remains as divided as the government, without a real leader and lacking a clear programme. – Sapa-AFP.