In the Senate, however, it will have a two-seat majority. That might become just a one-seat majority, according to Mirko Tremaglia, minister for Italians living abroad, because of an independent senator elected abroad who is set to join the right.

The narrow result has left many Italians wondering how long the next government will last and has unsettled financial markets, worried that Prodi will be too weak to push through unpopular reforms to tackle Italy's stagnant economy.

Whether or not Berlusconi officially concedes, Italy still faces weeks of political limbo as a new government is unlikely to be appointed before the second half of May.

Under the Italian constitution, the head of state formally gives the election winner the mandate to govern.

But the transition process is complicated this year because President Carlo Azeglio Ciampi's term expires on May 18 and he wants his successor to nominate the new prime minister.

The new parliament meets for the first time on April 28. It will elect a successor to Ciampi on May 12-13.

Berlusconi is worried the center left will elect one of its own supporters as president, which would provide Prodi's coalition with crucial institutional clout in the byzantine world of Italian politics.

The outgoing prime minister has said the election was so close Italy needed a German-style grand coalition in which left and right would govern together. Prodi has rejected this, saying he has a big enough majority to govern.

However, even before he has taken office, cracks have already started to appear in Prodi's coalition -- which stretches from Roman Catholic moderates to communists.

Within days of the election, the leader of Italy's most powerful trade union demanded the scrapping of a reform introduced by Berlusconi to promote labor market flexibility.

The call was backed by Communist Refoundation, which will have a powerful voice in parliament thanks to a strong election showing. Prodi wants to modify the law, not abandon it.