Silvio Berlusconi set to run again to become Italian prime minister

One of Mr Berlusconi's closest confidantes and most loyal supporters said he thought it was very likely that the three-times prime minister would contest the next election.

"There's a big groundswell of support behind him becoming a candidate," said Angelino Alfano, whom Mr Berlusconi anointed as his successor before having to step down late last year.

"I believe that he will decide to offer himself for re-election," said Mr Alfano, a Sicilian who is chairman of the PDL party.

"Many people are asking him to do it, including me."

The billionaire businessman believes he has a good chance of winning office, despite all the sex scandals, corruption trials, international gaffes and broken promises to the Italian electorate that have marred his reputation domestically and made him an international figure of fun.

"Berlusconi is determined to run again and he believes millions of Italians will vote for him," an insider in Mr Berlusconi's People of Freedom Party told The Daily Telegraph.

Mr Berlusconi's political comeback was also confirmed by one of his most ardent supporters, Daniela Santanche, who is an MP in his party.

"We have no-one better than Berlusconi. For months I've been saying that he is our best candidate."

She said she hoped he would choose a woman as his deputy but was coy about her own ambitions.

"I myself don't aspire to anything but having a woman on the ticket would be an inspiring idea."

The prospect of the 75-year-old Mr Berlusconi returning to power in Italy may cause bewilderment abroad, after all the compromising chapters in his tumultuous political career, but he has repeatedly insisted that huge numbers of Italians are clamouring to have him back as prime minister.

He plans to change the name of the party and recruit a new generation of young activists - just as in the past he appointed a clutch of young, attractive women to key ministerial posts, including a former topless model as equal opportunities minister.

The media tycoon was forced to resign in November over criticism of his handling of the economy and amid fears that Italy was being swept up in the euro zone crisis.

He was replaced by a technical government led by a professional economist, Mario Monti, but Mr Monti's mandate runs out next year and elections are expected sometime in the Spring.

The media mogul has been studying voter intention surveys in the past few weeks and has come to the conclusion that his party, known by its Italian acronym as the PDL, can only win with him at the helm, according to Corriere della Sera.

"He has spent the last few weeks studying the polls, analyzing the various scenarios for the 2013 vote, listening to allies within the PDL, as well as businesspeople and international contacts. At the end of it all the decision was made - Berlusconi will offer himself again as a candidate for prime minister," the daily said.

Surveys have reportedly shown that without Mr Berlusconi, the PDL would only get 10 per cent of the vote.

With him as its leader, it could expect to get 30 per cent - enough for it to forge a coalition with a smaller party and form a government.

Instead of spending the summer relaxing at his luxury villa on Sardinia's Costa Smeralda, Mr Berlusconi will be working hard on his re-election strategy at his villa at Arcore, outside Milan, Corriere della Sera said.

The villa was the setting for the "bunga bunga" sex parties that Mr Berlusconi allegedly hosted while prime minister, at which starlets and aspiring actresses would perform stripteases and dress up as nuns and policewomen.

Mr Berlusconi is currently on trial in Milan on charges of abuse of office and paying for sex with a teenage erotic dancer whom prosecutors claim was working as an underage prostitute.

He has denied both charges and is expected to give evidence in court on Oct 5.

The court was told on Monday that Mr Berlusconi knew that the Moroccan-born dancer, Karima El Mahroug, was under the age of 18 when he invited her to his parties.

The evidence came from a Carabinieri officer who said he knew the young woman, known by her stage name as Ruby the Heart Stealer.

Mr Berlusconi has in the past few weeks blamed many of Italy's economic woes on the euro and raised the spectre of the country opting out of the common currency.

A campaign based on opposition to the austerity measures being introduced by Mr Monti's technical government could go down well with many Italians, who are struggling to deal with tax rises, the extension of the pensionable age for men and women, cuts to public services and 10 per cent unemployment.

Mr Monti initially enjoyed a honeymoon period with the electorate but his approval ratings have since plummeted, as reforms demanded by Brussels and international markets start to bite.

Speaking on Tuesday, Mr Monti ruled out running for office when his term ends.