ITALIAN PRESIDENT Giorgio Napolitano yesterday rejected the resignation of the prime minister, Romano Prodi, and invited him to return to parliament to test the cohesion of his centre-left coalition, which had melted away embarrassingly in the middle of the week in a crucial Senate vote on his government's foreign policy.

Prodi's nine-month-old administration started to fall apart a week ago on Saturday, after a massive peace march in the northeastern city of Vicenza to protest against the expansion of the US military base in the city.

The peaceful and good-humoured demonstration, attended by tens of thousands of people, warmed the hearts of the pacifists and anti-American leftists who make up a significant slice of Prodi's multi-coloured coalition. It reminded them that there is a large constituency of Italians opposed to President George Bush's war on terror and encouraged them to make their voices heard in the corridors of power.

Prodi had banned government ministers from attending the rally, but senior members of two unreformed communist parties that make up his coalition felt no embarrassment about demonstrating against a government that they represent in parliament.

An opportunity to make the peace movement's voice heard came in the Senate on Wednesday, when foreign minister Massimo D'Alema sought the upper chamber's support for the government's international policy. That policy included the enlargement of the Vicenza base and the UN-authorised peace mission in Afghanistan, D'Alema said, but was significantly different from the uncritical pro-US policies of his predecessor.

D'Alema had already emphasised the importance of the vote, saying a government without a parliamentary majority on foreign policy would have no choice but to step down. Rejection of the Vicenza enlargement would be seen as an incomprehensibly hostile act by the US, while failure to refinance Italy's 2000-strong peacekeeping force in Afghanistan - which requires a parliamentary vote next month - would deprive the country of influence at the UN and leave her allies in the lurch.

D'Alema illustrated his intelligent and independent foreign policy in a masterful parliamentary speech, pressing his allies for clarity. It was better that those who did not support it voted no, he said, than they approve it while claiming it was something different than it really was.

The temptation to say no was too strong for two far-left members of the coalition, especially in the euphoric atmosphere generated by the Vicenza peace rally. Their refusal to back D'Alema left the government two votes short of a majority and risked handing control of foreign policy back to Silvio Berlusconi, the right-wing bogeyman who had done more than anyone to unite Prodi's fractious coalition.

The two men were deluged with insults and one was even punched in the face by a left-wing party activist who bumped into him on a train.

Supporters of the Communist Refoundation Party, fresh from the Vicenza march against the government, were now invited to take to the streets again to call for its revival.

The rebels' foreign policy defection had opened a serious crisis, reviving fears of a return to the revolving door governments of the past - Prodi's was the 61st administration in the 62 years of the Italian Republic - and anxieties for the country's immediate future. Another long and acrimonious election campaign might still not produce a workable parliamentary majority for either side.

The crisis was particularly frustrating for Prodi's supporters, as, after a hesitant start, the government finally appeared to be getting into its stride. Having passed an unpopular austerity budget, needed to stave off bankruptcy, it was beginning to tackle the liberalisation of an anachronistic and bureaucracy-bound economy.

After five years in office with a comfortable parliamentary majority, Berlusconi had still barely got to grips with economic reform, distracted perhaps by personal issues - such as reform of a justice system that was seeking to prosecute him.

Berlusconi now seems an attractive option for millions of Italians irked by Prodi's tax rises and his insistence that taxes must actually be paid. Berlusconi's light touch on taxation and understanding of the tax evaders urge are all the more appealing in contrast, though potentially disastrous for public finances.

If the collapse of Prodi's nine-month-old government looked like a throwback to the bad old days of the past, that was because indeed it was. The left-wing rebels, Fernando Rossi and Franco Turigliatto, may have been political unknowns, but there were better-known names involved in strangling the infant administration in its cot.

Life senators Giulio Andreotti, Francesco Cossiga and Sergio Pininfarina, the famous car designer, all withdrew their support from the government, contributing to its fall. Some commentators saw their defection - Prodi had normally been able to count on their support - as a manifestation of displeasure by the powerful forces that have conditioned Italy's political life for many years.

Andreotti, a former Christian Democrat prime minister, was seen as a mouthpiece for the Vatican, signalling the pope's disapproval of the government's plan to granting legal recognition for civil partnerships: a secular threat to the sanctity of the Catholic family.

Cossiga's revolt - that of another Christian Democrat veteran - was interpreted as a message from the Americans, unhappy at D'Alema's independent line in foreign policy, while Pininfarina's, so the thinking went, was a warning shot from the industrialist's association, Confindustria.

At 79, Cossiga was the youngest of the three, all of whose names evoke a bygone era, but who still retained the ability to sink a 21st-century government through their dissent.

Significantly, a law on civil unions was not part of a 12-point plan drawn up by Prodi in the wake of his defeat to try to unify and discipline his supporters. That was an indication of the continuing influence of the Vatican in Italian political affairs and a sop to centrist Catholic politicians whom Prodi was seeking to woo over to his side.

The government crisis is a symptom of a deeper political malaise that seems to prevent Italy from taking its rightful place among the modern European democracies. For half a century after the second world war, Italian politics were effectively frozen by the presence of the largest communist party in western Europe, an encumbrance that prevented any genuine democratic alternation in power.

Since then, the country has lived through a series of false dawns, hopes of reform replaced by disappointment. With the oldest population in the EU, it is a society dominated by the aged and resistant to change. If octogenarian senators played a key role in the government crisis, the elderly seem to dominate all aspects of society leaving little space for the young.

From politics to showbusiness and from education to industry, it's the same story of restricted opportunity. Forty-two per cent of university teachers are aged over 50, while the average age of people running a company is 61.

Last week, Italy marked the 15th anniversary of the start of the Clean Hands corruption investigation that swept away the traditional parties that had dominated postwar politics. Debate in the media showed there was still no shared perception of what it meant.

For some it was a politically motivated persecution of the moderate political parties accompanied by the frequent abuse of judicial power, for others a much-needed broom to clear institutions of intolerable levels of corruption. On one thing most people do agree, however: corruption has not been eradicated.

That "revolution" brought a first false dawn, the rise to power of Silvio Berlusconi. Seen as a breath of fresh air from outside politics, a skilled communicator untainted by the political compromises of the cold war era, he was the very man to modernise the country, applying the techniques he had learned so successfully in private business.

Greater familiarity would reveal a somewhat different truth: a man linked to the P2 masonic lodge and a personal friend and beneficiary of the corrupt Socialist Party leader Bettino Craxi, too conditioned by his own past to represent a modern future for Italy.

Instead, he would become a major element of the Italian anomaly, a billionaire controlling a vast media empire, capable of conditioning singlehandedly the outcome of the national democratic debate. News of Prodi's parliamentary defeat added 50 million to the market value of Berlusconi's Mediaset group in the space of three hours.

There are other alarming signs of a troubled past that will not slip away. Two weeks ago police in northern Italy arrested 15 suspected members of an offshoot of the Red Brigades, a left-wing revolutionary organisation that has been repeatedly decapitated and repeatedly reborn.

Armed with pistols and submachine guns, the group was allegedly planning a series of spectacular attacks, including the assassination of a labour law reformer, Professor Pietro Ichino.

Heirs to an organisation that was founded almost 40 years ago and with no realistic prospect of bringing about revolutionary change, the group had nevertheless succeeded in recruiting a number of trade union activists and a new generation of militants aged in their 20s.

Another anachronism, the Mafia, also appears to enjoy a rude good health. The arrest last April of Bernardo Provenzano, the so-called "boss of bosses", seems scarcely to have troubled the money-making enterprise.

Investigators say there has been a smooth transition of power and Cosa Nostra may now be under the government of a triumvirate: the Palermo-area bosses Salvatore Lo Piccolo and Domenico Raccuglia and a playboy boss from the western port of Trapani, Matteo Messina Denaro.

Drug trafficking is a major source of income for the Mafia, so the fact the country currently seems awash with cocaine can be no bad thing for their fortunes. A recent study of the contents of Florence's sewers showed the city was consuming the equivalent of 12 kilos of cocaine every six months, a higher rate of consumption than London.

Yet tackling organised crime has not been a high priority for either political coalition in recent years.

As opposition members of the Senate cheered, jeered and hurled their papers into the air on confirmation of Prodi's defeat, one had the sense that many of the country's problems begin and end in parliament.

An electoral system based on proportional representation and the Senate's eccentric voting rules - which mean an abstention counts as a no - leaves the government coalition hostage to its most extremist fringes.

But the problems are the same for the opposition. Berlusconi, 70, and recovering from heart surgery, has similar difficulties to Prodi in holding together a heterogeneous coalition that is ever less docile under his leadership.

For Prodi's government, the Senate scare may actually be a salutary lesson. The 12-point plan imposed on his coalition includes support for D'Alema's foreign policy, infrastructure projects disliked by the Greens, and pension reforms opposed by the communists.

Prodi will control government communications and he will have the final say in all disputes.

The prime minister may now be able to turn his weakness into a form of strength, the kind of advantage a pedestrian has when stepping into the road in front of a car: his vulnerability obliges the vehicle to give way.

Of course the game of "chicken" can sometimes end in disaster, and there will be many more opportunities in the Senate to test the government's rediscovered cohesion.