Third Term

Veltroni's concession came after early results from the two-day election projected a big majority in both houses of parliament for the 71-year-old media magnate, who now has a strong mandate to deal with Italy's deep economic and social problems.

"As is the custom in all Western democracies, I telephoned Berlusconi to acknowledge his victory and wish him good luck in his work," Veltroni told supporters.

The Piepoli polling institute had earlier tipped Berlusconi's center-right coalition to win 164 of the Senate's 315 seats, giving him an absolute majority in the chamber.

In the lower house Chamber of Deputies -- where the winning coalition is automatically awarded 340 seats of a total 630 -- Berlusconi's forces won 46.4 percent, according to projections based on a 41-percent vote sample.

Berlusconi had all but claimed victory little more than an hour before Veltroni's concession speech. During the election campaign, Berlusconi vowed to cut taxes and rein in Italy's huge debt. While he had been widely expected to win the lower house, his strong Senate majority will help him push through structural reforms many say Italy needs to stay out of recession.

Far-left resignation

Veltroni's defeat prompted Fausto Bertinotti, the head of the newly formed far-left Rainbow Left party grouping communists and Greens, to resign from politics.

"My role in the leadership ends here, this evening, with a defeat, I'm afraid. I will continue to be active, I will continue to help out, but my career ends here," Bertinotti, 68, told reporters, according to the ANSA news agency.

"It's a complete defeat of unforetold proportions," he said. "Now all the parties making up the Italian left need to talk."

The far-left parties formed the Rainbow Left after Veltroni excluded them when he set up his American-style Democratic Party in October.