Italian Prime Minister Silvio Berlusconi has told President Giorgio Napolitano that he will resign after the new budget law currently making its way through parliament is approved, the head of state's office said in a statement on Tuesday.

The budget law is expected to be passed by the end of this month, but its passage might now be accelerated.

Napolitano said Berlusconi was aware of the consequences of a vote in parliament on Tuesday in which his centre-right coalition failed to secure a majority in the lower house.

It said he had noted the urgent necessity of seeing the new budget law approved in parliament.

Once this engagement is fulfilled, the Prime Minister will hand in his mandate to the head of state who will proceed with appropriate consultations, paying close attention to the positions and proposals of all political forces, the statement said.

(Writing By James Mackenzie)