Mr Berlusconi says he will announce a new cabinet soon

Mr Berlusconi said after talks with President Azeglio Ciampi that he had accepted the mandate.

He added that he hoped to present his new centre-right coalition cabinet before a confidence vote in parliament early next week.

Mr Berlusconi's government collapsed after a crushing defeat in local polls.

BERLUSCONI IN CRISIS 4 April: PM's coalition loses 11 out of 13 regional elections to centre-left opposition 14 April: National Alliance calls for vote of confidence 15 April: Union Of Christian Democrats pulls out of governing coalition 18 April: Opposition wins another regional poll 20 April: PM resigns, but will stay on as caretaker while he forms new coalition 21-22 April: President Ciampi holds talks with political parties to resolve crisis Q&A: Berlusconi crisis Press review

If Mr Berlusconi had not managed to revamp his coalition, President Ciampi would have been likely to callsnap elections, analysts say.

The president has held two days of crisis talks with leaders of Italy's political parties after Mr Berlusconi's resignation.

Mr Berlusconi's key partner, outgoing Foreign Minister Gianfranco Fini, said earlier on Friday that he expected the formation of a new cabinet very soon.

Mr Berlusconi quit as prime minister after Mr Fini's party, the National Alliance, threatened to follow the Christian Democrats by pulling out of government.

No Italian government has managed to stay in office for an entire five-year term since World War II.

However, Mr Berlusconi - who was elected in 2001 - holds the record for leading the longest-serving post-war cabinet.

The reaction from the public has been muted as people are used to seeing their prime ministers technically resign as a trick to reform shaky coalitions, our correspondent says.

Mr Berlusconi said earlier his Forza Italia party had a mandate to lead until 2006 and it would do so.

Decline in popularity

The government was plunged into crisis last week the Christian Democrats withdrew their four ministers.

The National Alliance, in its threat to follow suit, said current policies were skewed in favour of the country's more prosperous north, represented in the coalition by the Northern League.

Analysts predicted that assembling a new team may prove difficult, as Mr Berlusconi risked alienating the Northern League if he gave more posts to the National Alliance.

They said that while the Northern League wanted the wealth produced in the north to be spent locally, the National Alliance and the Christian Democrats wanted heavy investment in the south to kick-start economic development there.

Popular opposition to the war in Iraq and a struggling economy have contributed to a decline in the prime minister's popularity.