Silvio Berlusconi backtracked on pulling the plug on the Italian government (Reuters)

Silvio Berlusconi has backtracked on his pledge to bring down the Italian government and said that his party would continue supporting the administration led by Prime Minister Enrico Letta.

"After a tormented internal discussion, we've decided to vote in favour of this government," Berlusconi, 77, told the Senate.

The former PM said he believed that the government could still accomplish its tasks of "pacifying" the political environment, reforming the justice system and lowering taxes.

Just an hour earlier, Sandro Bondi, the whip for Berlusconi's PDL party, had said that he and his colleagues were going to oppose the government in a make-or-break confidence vote.

"You will fail," Bondi told Letta.

Despite Berlusconi's intervention some PDL senators, including former justice minister Nitto Palma, said they still planned to vote against the government.

Some Italian journalists described the parliamentary session as "Kafkaesque".

Letta, a member of the centre-left Democratic Party (PD), called for the vote of confidence to be held after Berlusconi ordered his five ministers in government to resign, triggering a political crisis.

If the government does not secure the backing of a majority of MPs in the vote, it will be automatically dissolved and elections will follow.

Berlusconi's decision split his party in two. The resigning ministers, including deputy prime minister and Berlusconi's right-hand man Angelino Alfano, described it as "an awful idea".

Senator Carlo Giovanardi, a long-time ally of Berlusconi, said there were "more than 40" PDL MPs prepared to support the government in the confidence vote, despite Berlusconi's initial opposition.

Berlusconi officially pulled his ministers from the government to protest against a planned rise in VAT to 22%.

The PD accused him of using the tax rebate as an excuse. It said the real reason for his move to trigger elections was his imminent expulsion from parliament as a criminal after his conviction for tax fraud.