Silvio Berlusconi’s third term as Italian prime minister was in crisis today after one of his main allies and 33 MPs deserted him, stripping his party of its parliamentary majority.

The move by the supporters of Gianfranco Fini to set up a new group cuts the number of Freedom People party MPs to just above 300, short of the 316 required for a majority, meaning that on some controversial policy issues the prime minister may no longer have his way.

Fini, the former post-fascist turned liberal conservative who co-founded the Freedom People party with Berlusconi but who has fallen out with the prime minister, notably over ethics within the party, said his group would only vote with the government if measures proposed upheld the party’s electoral promises and “the general interest”.

Silvio Berlusconi and his aides were putting a brave face on the defection tonight, promising to retain in government ministers loyal to Fini, and thereby see out the administration’s term through to 2013.

Silvio Berlusconi Pier Luigi Bersani

But the split was a serious blow to Berlusconi, who has been under siege since revelations last year that he hosted parties attended by a prostitute, and more recently by a wave of corruption scandals. “It’s always difficult to say for how long artificial respiration can last, but the government is no more,” said Pier Luigi Bersani of the opposition Democratic party. “He can’t think it is August and everything will end up with wine and roses.”

“Berlusconi emerges substantially weakened from this row,” said Alessandro Campi, a professor of political science at Perugia university. “The government will have serious problems if it has to negotiate the passing of every law in the coming months.” Fini has been in dispute with Berlusconi for months over issues ranging from immigration to the prime minister’s attempt to restrict the use of police wiretaps and punish journalists who publish transcripts of them.

After Silvio Berlusconi issued a statement on Thursday describing Fini’s views as “absolutely incompatible with the founding principles” of the party, Fini fought back in a hastily called press conference.

“Last night, in two and a half hours, without being able to give my views, I was effectively expelled from the party I helped found,” he said. Explaining his rift with Berlusconi, Fini said the party’s defence of scandal-hit members of the government “too often meant an expectation of impunity.” Fini added that he was fighting for legality “in the fullest sense of the word, that is fighting crime as the government is meritoriously doing, but also public ethics, sense of state and playing by the rules.” Fini also railed at Berlusconi’s bid to force him to resign his post as speaker in the lower house.

Among the supporters of Fini who have joined the new parliamentary group, called Future and Freedom for Italy, are European Affairs minister Andrea Ronchi and deputy Giulia Buongiorno, a lawyer who gained notoriety defending former prime minister Giulio Andreotti against mafia charges and Italian student Raffaele Sollecito against charges of murdering British student Meredith Kercher.

As chairwoman of the lower house justice commission, Buongiorno has been instrumental in battling Berlusconi’s wiretapping clampdown, which will now be voted on after the summer break.

“With the wiretap vote coming up in the autumn, Berlusconi has got a month to find 10 or so deputies,” said James Walston, a political analyst at the American University of Rome. “He will be going on a shopping spree with the Union of Christian Democrats in his sights.” The small UDC party is led by Pier Ferdinando Casini, a former Berlusconi ally.

Alessandro Campi traced the break-up between Fini and Berlusconi to a shouting match the two had at a conference in April, which culminated in Fini demanding “What will you do? Get rid of me?”

“Berlusconi probably never forgave Fini for challenging him in public,” he said.

Silvio Berlusconi Scandals: The highs and lows

March 1994 Berlusconi’s Freedom Alliance wins election. Falls after seven months.

June 2001 His Forza Italia party returns to power.

May-June 2003 Berlusconi put on trial on corruption charges but granted immunity from prosecution.

January 2004 Berlusconi’s immunity ruled unconstitutional and trial resumes in April

December 2004 Berlusconi is cleared of corruption after a four-year trial.

April 2005 A resounding defeat in regional polls leads to the coalition’s fall and Berlusconi’s resignation, but after receiving a presidential mandate he forms a new government.

November 2006 Berlusconi collapses at a rally. He is fitted with a pacemaker.

April 2008 Berlusconi wins general election, securing a third term as premier.

May 2009 Berlusconi’s second wife says she wants a divorce after revelations about his antics with other women including 18-year-old Naomi Letizia

June 2009 Tape recordings of Berlusconi and escort girl Patrizia D’Addario are released to the press.

October 2009 Constitutional court overturns a law which granted Berlusconi immunity while in office.

December 2009 Berlusconi suffers two broken teeth and a fractured nose after being hit by a souvenir model of Milan’s cathedral during a visit to the city.

March 2010 Berlusconi’s coalition does well in local elections, winning four areas from the opposition.