One-year jail term to be served through community service or house arrest, with ban on public office referred to another court

Silvio Berlusconi, Italy's longest-serving postwar prime minister, has been handed his first definitive criminal conviction in more than 20 years of legal battles but the country's supreme court spared him the immediate prospect of being barred from public office.

In a long-anticipated ruling, the five judges of the court of cassation emerged from more than seven hours of deliberations to issue a verdict confirming a four-year jail term for the leader of the Freedom People party (PdL), a vital part of Italy's coalition government.

That sentence had already been cut to one year according to a 2006 amnesty, and, owing to Berlusconi's age – he will be 77 in September – it will be served through house arrest or community service.

It was enough, however, to place great pressure on the fragile government and prompt fury among his supporters. "This country was famous for being the cradle of the law. Today it has become its tomb," said Luca d'Alessandro, a PdL MP and secretary of the lower house of parliament's justice commission. "Honour and solidarity with Silvio Berlusconi, who is certainly more innocent and clean than those who unjustly convicted him."

The editor of a right-wing newspaper, Il Foglio, labelled the sentence "vile".

The part of the sentence that Berlusconi was most worried about – a five-year ban on public office – will not be enforced in the near future after the judges ordered another court to determine its length. Prosecutors during this final appeal hearing had argued that the ban should be cut to three years. Had it been upheld, it would have stymied Berlusconi's immediate political ambitions. As it is, he will be able to continue as a senator in Italy's upper house of parliament and leader of his party.

The verdict is still likely to cause trouble for the ruling coalition of Enrico Letta, which since late April has united his centre-left Democratic Party with Berlusconi's PdL in an awkward and unhappy marriage.

The prime minister said this week he was not expecting an "earthquake" from the verdict, and Berlusconi himself – who has historically railed against leftwing magistrates plotting against him – has seemed unusually reluctant to provoke his party members into open rebellion. That has not stopped many of them threatening it.

The PdL leader could yet decide to pull the plug on a government he feels is not serving his interests as he had hoped. However, he may realise that plunging the eurozone's third-largest economy into fresh turmoil would not win him any popularity with weary voters or the head of state, president Giorgio Napolitano.

Observers say pressure on the government could equally come from the other side of the coalition, where many in the PD who were squeamish about joining forces with their political bête noire may draw the line at continuing in an coalition with a convicted criminal. Immediately after the verdict Nichi Vendola, head of the opposition Left Ecology Freedom party (SEL), said it was "not possible" for the coalition to continue.

"Faced with this conviction I think it is necessary to bear the consequences: it is not possible to imagine that the PD can remain an ally of Silvio Berlusconi's party. It is not possible to imagine that Silvio Berlusconi can remain at the centre of the political scene. I think that big changes are necessary to give a moral response to the country."

The verdict convicted Berlusconi of the fraudulent purchase of broadcasting rights by his Mediaset empire and the evasion of about €7m (£6m) in taxes in 2002 and 2003 – when he was prime minister. His defence lawyers had argued that he should be acquitted because his political commitments meant he was not actively involved in the company.

His defence lawyers had argued that he should be acquitted because his political commitments meant he was not actively involved in the company. Led by Franco Coppi, a lawyer specialised in cassation appeals who successfully defended former prime minister Giulio Andreotti against charges of mafia ties, they also argued that the crime of which he was accused was not technically a penal offence.

But prosecutors, supporting the verdicts of two lower courts which convicted Berlusconi in October last year and again in May, said Berlusconi's control over Mediaset was "ongoing" at the time, and he was "the mind" behind the system of tax fraud.

Berlusconi was not present at the court but spent the day at his Rome residence, Palazzo Grazioli, reportedly with two of his children, his closest advisers, lawyers and girlfriend Francesca Pascale.

Ever since he entered politics in 1994, Berlusconi has been fighting an almost relentless wave of court cases, but until Thursday night not a single one had ended in his definitive conviction. Several lower grade convictions were either thrown out, overturned on appeal or timed out owing to their statute of limitations.

It is not only with the court decision on his public office ban that his legal battles will continue. In June he was given a lower-grade conviction and sentenced to seven years in jail and a lifetime ban on public office for paying for sex with an underage prostitute and abusing his office to cover it up. He is appealing against the verdict – and, even if that appeal fails, he will be allowed a second.

He is also appealing against a conviction for publishing the transcript of a leaked wiretap in his family newspaper, Il Giornale, for which he was ordered to serve a one-year jail sentence. In October, meanwhile, a a court is due to rule on whether he should be tried for allegedly bribing a senator to switch political sides. He denies the allegations.