Rome: Premier Silvio Berlusconi's key political ally issued an ultimatum on Sunday to the embattled Italian leader, saying he must lower taxes, decentralize government and end the country's participation in the Libyan war if he wants to remain in power.

But at the same time, Northern League leader Umberto Bossi said that early elections would be an unwise gift to the opposition indicating that for now, at least, Berlusconi could count on his support.

Bossi listed his demands at the League's annual rally in the party's power base near Bergamo. The speech was eagerly anticipated since Berlusconi's political survival has been put in question following two recent electoral drubbings.
   
The premier, whose popularity has shrunk amid an underage sex scandal and Italy's stagnant economy, needs the League's support to stay in power until his five-year term ends in 2013.

Bossi said Berlusconi's government could last its term and warned that early elections would only favor the opposition. But he said Berlusconi must respond to the League's demands, including moving at least two ministries out of Rome to the north.

"It's not a given that we will go with Berlusconi in the next elections," Bossi told the crowd decked out in the League's trademark green.

"It will depend on the choices that are made. The leadership of Berlusconi can finish in the next election if, logically, they attentively listen to the proposals that we give him." He said.

(Agencies)