Berlusconi on Tuesday refused to surrender Italy's election after official results handed victory to Prodi. The incumbent alleged "irregularities" in a vote that gave a seat-of-the-pants victory to his rival Romano Prodi.

"We cannot recognize the outcome of a vote until there is a definitive clear judgement," he said. "Until that day, no one can say they have won."

The full official results showed Prodi's team winning 158 seats of 315 seats up for grabs in the Senate, compared to 156 for Berlusconi. The Prodi alliance also won 342 seats in the 630-seat lower house Chamber of Deputees compared to 281 for Berlusconi.

Berlusconi raised the prospect of declaring invalid the pivotal votes for six senate seats chosen by Italians living abroad. That vote had swung the election to Prodi with four of the six seats going his way.

Each chamber in the Italian parliament has equal power, meaning both houses must be secured for a government to rule effectively.

Berlusconi's own Forza Italia party had said it would press for a recount given the wafer-thin margin -- just 25,224 votes -- which separated the two sides in the lower house.

Election result important for Europe

Europe's most pro-EU leaders meanwhile were looking to Romano Prodi's possible victory to give a new impetus to the 25-nation bloc.

After Italy's unpredictable Prime Minister Silvio Berlusconi, the former European Commission president is expected to bring an indefatigable europhile to one of the EU's biggest and founding countries.

"The results of this election go beyond Italy's borders," said Belgian Prime Minister Guy Verhofstadt, who recently penned a book in favor of a United States of Europe. "Romano Prodi's victory is also important for Europe, especially during this period needing a pro-European vision and direction. I am convinced that Italy, steered by Prodi and his deep European experience, will once again contribute to Italy's long EU tradition."

Congratulating Prodi, France's Europe Minister Catherine Colonna also seized on his more than perfect EU credentials, which she said would ensure that he plays a leading role on the EU stage.

Relaunching Europe?

"Trusting in your experience as president of the European Commission, I am convinced that you will play an essential role in the re-launch of Europe", she said.

The leader of the Liberal Democrats in the European Parliament, Graham Watson, said that a victory by Prodi would be "good news.

"An experienced and clearly pro-European Italy present in the European Council will help us get the EU back on track", he said.

Prodi's challenges

However, as commission president between 1999 and 2004, Prodi was often criticized for his lack of charisma, his difficulty in communicating, and a permanent preoccupation with his return to Italy to challenge Berlusconi.

A Prodi-led government cannot expect all to be smooth-sailing as far as the EU is concerned, especially as regards efforts Rome will need to make to bring the public finances into line with tough EU rules, which he once called "stupid" when he was commission president.

"He risks having to take unpopular measures to bring down the Italian deficit below three percent of gross domestic product by 2007," said analyst Antonio Missiroli with Brussels-based think-tank the European Policy Center.