Italian voters set to reject the prime minister's mayoral candidates both in his home city and in Naples

Italy's prime minister, Silvio Berlusconi, suffered a humiliating and politically ominous defeat in his home city of Milan on Monday when his party's choice for mayor, Letizia Moratti, was ousted in a runoff by a local leftwing lawyer, Giuliano Pisapia.

There was yet more bad news for the right in Naples where the candidate of the fiercely anti-Berlusconi Italy of Principles party, Luigi De Magistris, stormed home with more than 65% of the votes.

Berlusconi was defiant despite the results that some political adversaries said marked the beginning of the end of his ascendancy in Italy's public life.

"This time we didn't win, but we continue. I am a fighter. Any time I have lost, I tripled the effort," he told reporters in Romania, where he was on an official visit.

Milan was one of 90 towns and cities where runoffs were held after clear winners failed to emerge from the first round of voting on 15 and 16 May.

The contest there was by far the most important. Milan is the city from which Italy's flamboyant prime minister launched his political career, 17 years ago. It is also the city in which he is on trial for a range of alleged financial and sex-related offences. And, not least, it is the stronghold of his key allies in the populist, Islamophobic Northern League.

Federico Manda, a tram maintenance technician, was one of a steady stream of last-minute voters. He had voted for "a change in Milan", he said. "Berlusconi has monopolised this municipality, putting his men in everywhere, often in the wrong places."

Berlusconi tried to turn the ballot into a vote of confidence on his private life and his government. The results suggested that was a disastrous error of judgment.

After the first round, Moratti came in six percentage points behind her main rival. In the subsequent campaign, the prime minister and his Freedom People movement tried to make up lost ground with an overtly racist campaign directed at Pisapia's sympathy for Roma and Muslims.

Professor James Walston of the American University of Rome, said he feared Berlusconi's tactics could have a lasting impact on interracial and interfaith relations in Italy. "This type of language has been used by the prime minister, not some neo-fascist maniac on the fringes," he said. "It will be difficult to bring Italian political language back to acceptable European levels."

The left's victory was all the more remarkable, since its candidate was not the choice of the mainstream Democratic party but one whose past is tinged with radicalism. Pisapia, who once defended the Kurdish separatist leader Abdullah Ocalan, was elected to parliament in the 1990s as an independent on the slate of the hardline Communist Refoundation party.

His initial sponsor in the mayoral race was the Left, Ecology and Freedom party, which is led by the gay, formerly communist governor of Puglia, Nichi Vendola.