Enrico Letta, Italy’s centre-left prime minister, is seeking urgent parliamentary support for a new government after centre-right leader Silvio Berlusconi pulled his ministers out of their five-month-old coalition, risking a financial market backlash.

Mr Letta held crisis talks last night with Giorgio Napolitano, head of state, who had said he would explore all alternatives before using his constitutional powers to dissolve parliament and call new elections. Mr Letta is expected to address parliament early this week.

Italy’s grand coalition has been on the brink of collapse since Mr Berlusconi lost his final appeal against a conviction for tax fraud on August 1 with the prospect of being banned from public office next month. Mr Berlusconi roused his supporters celebrating his 77th birthday yesterday by issuing a defiant call for elections “as soon as possible”, slamming Mr Letta’s Democrats for deciding to proceed with a rise in sales tax from October 1.