The Italian Communist leader, Mr Fausto Bertinotti, said yesterday he was ready for a compromise on an austerity budget designed to help Italy join the single European currency, days after his refusal brought down the government.
"We have renewed the offer of an alliance with the government and we are seeking a compromise on the budget," Mr Bertinotti said in Assisi.
The Prime Minister, Mr Romano Prodi, handed in his resignation on Thursday after the Refounded Communist party rejected the draft budget and raised doubts that Italy would meet the criteria for the launch of the single currency in 1999.
The Communists on Saturday put a compromise proposal to President Oscar Luigi Scalfaro in the latest twist in an affair which Mr Prodi has called the "craziest in the world". Despite their scepticism at the sudden volte-face, leaders of the centre-left Olive coalition met yesterday to study the offer and some were hopeful the coalition could be revived.
"We are certain it is possible to rebuild this majority led by Mr Prodi," a Greens spokesman, Mr Luigi Manconi, said. "It is the duty of the communists, which caused the break, to give signals and guarantees and take steps forward."
The Communists' economic expert, Mr Nerio Nesi, who had criticised the break between his party and the centre-left majority, welcomed the results of the meeting and was hopeful that an accord could be struck.
The head of the Communists in the lower house of parliament, Mr Oliviero Diliberto, said his group had never questioned the government or Mr Prodi's abilities. He said: "One can, must negotiate."
The budget was drawn up to prepare Italy for a single currency by reducing the public spending deficit to 2.8 per cent of gross domestic product (GDP). Support from the Communists, whose 8.5 percent showing in the April 1996 elections prevented the Olive coalition from winning an absolute majority, had been essential. President Scalfaro, who has been consulting with political leaders since Friday, is planning to spend today and tomorrow meeting representatives both of the Olive grouping and the centreright Freedom Alliance.
Within the Olive coalition, compromise appeared unlikely and the proposal by Mr Bertinotti was met with extreme caution. Mr Cesare Salvio, head of the PDS group in the Senate, said it was "right to make a final attempt to resolve the crisis," but added: "The finance law constitutes a point of reference that you can't cross."