The auction had been due to get underway at the Communications Ministry at 1200 GMT.

Similar auctions earlier this year in the UK and Germany generated billions of dollars more than expected for government coffers.

Analysts predicted that the Italian auction would raise about $24.5bn for the state.

The bidders are expected to include Italy's four existing mobile network operators and two prospective new entrants to the market.

Blu talks

Late on Thursday morning, shareholders in Blu - one of the existing operators - were still stuck in a marathon meeting, deciding whether they would participate in the auction.

But with only a few minutes to go before the auction's scheduled start, the company said its shareholders had agreed unanimously to proceed.

The meeting, which had begun on Wednesday evening, was called in an attempt to resolve a dispute over the company's ownership structure and the likely cost of the new licences.

Some shareholders - including the Italian motorway group Autostrade which has a 32% stake - were thought to be unwilling to pay the high sum that will be necessary to win a new licence.

And the group's only telecoms company, British Telecom, was believed to be reluctant to raise its 20% stake by as much as some other shareholders would like.