Silvio Berlusconi said Tuesday he will stand down as Italian prime minister once key reforms aimed at calming market turmoil are adopted this month, after his coalition lost its majority in parliament.

Italy\'s Prime Minister Silvio Berlusconi (left) and Northern League leader Umberto Bossi await a vote on Italy\'s public accounts at the parliament in Rome.

"After the adoption of the stability law, which will contain all the requests made by the eurozone, I will resign," he told the network Canale 5, one of the prize assets in the billionaire tycoon\'s vast media empire.

Berlusconi said that after his resignation he expected President Giorgio Napolitano to dissolve parliament and call early elections.

The premier -- who survived at the helm on and off for nearly two decades despite a string of scandals -- appeared shocked at the parliamentary vote result and the defections from his ranks triggered by a deepening of Italy\'s debt crisis.

The premier has long dismissed warnings from the European Union and his critics at home about Rome\'s ailing finances, but with his third term as premier winding up, he admitted it was time to "show the markets that we are serious."

"This parliament is paralysed. With the defection of seven members of our majority concretised today, the government no longer has a majority," the 75-year-old Berlusconi said in an audio recording in which he sounded weary and humbled.

Italy has promised the European Union a series of reforms including a sell-off of state assets and an overhaul of the labour market in a law that is expected to receive final approval from parliament by the end of the month.

A Senate committee is set to begin discussing the law on Wednesday.

Following Berlusconi\'s announcement, opposition leaders called for the adoption of the austerity measures to be sped up.

It will be up to Napolitano to steer the political course after Berlusconi stands down.

If the Italian President decides not to call a general election, other options include expanding the current centre-right coalition with a new leader or the formation of a national unity government.

A scathing and visibly shaken Berlusconi spoke bitterly of betrayal as he stormed out of parliament following the vote.

A note he scribbled during the proceeding dvote was captured on camera -- it referred to the defecting deputies as "traitors".

Borrowing rates hit new records after the vote on investor fears, with the yield on 10-year bonds reaching 6.76 percent and the spread between Italian and German benchmark bond yields widening to a new high of nearly 5.0 percent.

"We all know that Italy runs the risk over the next few days of not having access to commercial debt markets," Pier Luigi Bersani, leader of the main opposition Democratic Party, said after the vote.

Global markets were focused on the political crisis playing out in Italy, the third-biggest economy in the eurozone, while European Union ministers held talks in Brussels in which they voiced concern about the situation.

The EU\'s Economic Affairs Commissioner Olli Rehn said the situation in Italy was "very worrisome" and said it was under "very significant" market pressure.

He said reforms should come "the sooner the better because time is of the essence".

The combination of Italy\'s low growth rate and 1.9-trillion euro ($2.6-trillion) debt has fanned investor alarm that it could be the next victim of Europe\'s debt crisis even though its deficit is relatively low.

The premier\'s popularity rating has slumped to a record low of 22 percent amid the current crisis and he is currently a defendant in three trials for bribery, tax fraud, abuse of power and paying for sex with a 17-year-old girl.

Italy has been on the ropes since last week when the government agreed to special surveillance from the International Monetary Fund and the European Union to ensure it was meeting crucial targets to cut its massive debt.

The first EU experts are set to begin work in Italy on Wednesday.

Berlusconi -- a dominant feature in Italian politics for almost two decades -- had faced increasing calls for his resignation over the string of sex and corruption scandals as well as Italy\'s continued economic woes.

The defection last year of a key ally and bitter infighting within the government signalled the start of a steady decline intensified by Italy\'s failure to kick-start economic growth after years of virtual stagnation.

Berlusconi survived a close confidence vote in December 2010 but came under ever-growing pressure after international rating agencies downgraded Italy\'s debt and he lost three popular referendums on his government\'s policies.

He has also been dogged by legal troubles and is currently a defendant in three trials -- for tax fraud, bribery, abuse of power and paying for sex with a 17-year-old girl known as "Ruby the Heart Stealer" -- but denies the charges.