Italy's prime minister and leader of 'Forza Italia' party Silvio Berlusconi | Angelo Carconi/EPA Italian court lifts ban on Berlusconi running for office Decision comes as far right and populists try to form government.

An Italian court has lifted a ban on Silvio Berlusconi holding public office, Corriere della Sera reported on Saturday.

The decision by the court in Milan, issued late on Friday afternoon, shakes up Italy's political landscape just as the populist 5Star Movement and far-right League are engaged in talks to form a government.

Italian President Sergio Mattarella has given the two parties until Sunday to reach a coalition deal and end the political impasse that followed a March general election.

Due to the ban, imposed as a result of a conviction for tax fraud, Berlusconi could not run as a candidate in the last poll. But the court's decision may increase the temptation for the former prime minister to push for another election, on the basis that his Forza Italia party would perform better with him as its lead candidate.

Berlusconi on Wednesday gave the go-ahead to the League, which ran in the last election in an alliance with his party, to try to form a government with the 5Stars.

Even if such a government is formed, Berlusconi would have considerable power to bring it down if he chose to do so. The 5Stars and the Lega would have only a small majority in Italy's Senate and would probably need Berlusconi’s backing to pass the most controversial measures.

"Berlusconi can be a candidate again" Forza Italia tweeted. "Finally five years of injustice are over."

Giada Zampano contributed reporting from Rome.