Wed Oct 2, 2013 6:20am EDT
* Letta appeals for support to avert "fatal" risk
* Centre-right in disarray after ministers back Letta
By Paolo Biondi
ROME, Oct 2 (Reuters) - Italian Prime Minister Enrico Letta appeared on course to win a confidence vote on Wednesday following a flood of defections from media tycoon Silvio Berlusconi's centre-right party.
With the numbers of likely rebels in Berlusconi's People of Freedom (PDL) growing, the prime minister's position was strengthening for the Senate vote. "The majority (for Letta) is certain," one PDL official said. "We'll have a landslide soon."
Berlusconi's furious decision on Saturday to withdraw his ministers from the coalition provoked the revolt, with dozens of Senators defying orders and declaring they would vote for the government.
As the debate on the confidence motion opened, Letta said Italy risked being left without a stable government if his administration fell.
Letta gave the warning after a week of political drama as the fragile accord that held his unwieldy coalition of left and right together broke apart over moves to expel Berlusconi from parliament due to his conviction for tax fraud.
"Italy is running a risk that could be fatal, without remedy. Thwarting this risk, to seize or not seize the moment, depends on the choices we will make in this chamber. It depends on a yes or a no," he told the Senate.
For Letta, whose centre-left Democratic Party (PD) has a strong majority in the lower house, the vote in the 315-seat Senate will be decisive. A vote is expected in the early afternoon after a debate by Senators.
He can count on at least 138 votes from the PD and centrist parties, but to be sure of winning he would need at least another 20 votes for a majority.
Late on Tuesday, Letta told the five centre-right ministers ordered by Berlusconi to quit the government that he would not accept their resignations, a sign of confidence and an invitation to other moderates to support him in the vote.
He said the government would continue with tight control over public finances and a focused programme of economic reforms and said it was vital that Italy had a stable government in 2014 when it assumes the rotating presidency of the European Union.
Financial markets have responded positively to signs that defectors from the centre-right would guarantee the survival of the government and avert the uncertainty of new elections.
WATERSHED
The revolt in Berlusconi's party has been a watershed moment for the 77-year-old billionaire, the undisputed leader of the centre-right for two decades. It opens an unpredictable new chapter in Italian politics.
Angelino Alfano, the 42-year-old PDL party secretary once seen as Berlusconi's heir, finally broke with his patron and called on the party to support the Letta government from which he himself had resigned as interior minister on Saturday.
Bitterness in the Berlusconi camp at the defections was underlined by a stark headline in the family-owned Il Giornale daily reading "Alfano betrays".
An opinion poll by the Ipsos institute conducted on Tuesday showed 61 percent of PDL voters felt the party should back Letta and 51 percent that it should pick a new leader to take over from Berlusconi and renew the party.
Even if Letta's government survives the vote, there is no certainty that it will be capable of the kind of deep reforms or painful tax and budget measures needed to reverse a decade of economic stagnation and cut its 2 trillion euro ($2.7 trillion)public debt.
But with memories fresh of the chaos that helped to bring the euro zone close to collapse before the last Berlusconi government fell in 2011, the turmoil in Italy has been closely watched by Rome's international partners.
On financial markets Italy's borrowing costs have risen markedly. With the European Central Bank pledging to support euro zone bonds, however, there has been no sign of the panic seen at earlier crisis points.
The main barometer of market concern, the premium investors demand to hold Italian 10-year government bonds over AAA-rated German Bunds, has fallen from more than 300 basis points at the start of the week to 266 points on Wednesday.
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