Umberto Bossi, leader of the oppositon Northern League, steps down as financial scandal engulfs the party.

Umberto Bossi, the firebrand leader of Italy’s opposition Northern League party, has resigned after allegations that taxpayers’ money was used to pay for renovations at his villa and holidays for his children, the party has said.

The move, announced at a meeting of the league’s federal council in Milan, is likely to destabilise the populist, anti-immigration party, weakening one of the main political forces opposing Prime Minister Mario Monti’s austerity programme in parliament.

Earlier this week, prosecutors placed Francesco Belsito, the party’s treasurer, and two other officials under investigation

over accusations of fraud and illegal party financing.

Belsito allegedly used the party’s funds to pay for the personal expenses of Bossi’s sons, including travel, dinners, hotel accommodation and expensive cars, as well as improvements to the leader’s house.

Bossi, 70, is not under investigation and has denied ever using the party’s money for his or his family’s benefit.

No support for Monti

The raucous leader, known for his unorthodox, rabble-rousing rhetoric, had been at the helm of the league since founding it in the late 1980s as a northern-based counterweight to the corrupt ways of “Roma Ladrona” (“Robber Rome”).

Despite its pro-devolution agenda, and initially calling for the secession of Italy’s wealthy north from its less developed south, the Northern League became a strong ally of Silvio Berlusconi, the former prime minister, joining all three of his governments.

After Berlusconi was brought down last November by market fears over Italy’s huge public debt, Bossi parted ways with his former ally and refused to support his successor, Mario Monti, hoping to capitalise on popular discontent with the new government’s painful austerity measures.

Even after a serious stroke in 2004 caused him speech problems, Bossi kept a tight grip on the league.

But the party’s rank-and-file, and even some top officials, had long complained that thelLeague had become more interested in the perks of ministerial jobs in Rome than the concrete problems of its northern electorate, mostly small businesses and self-employed workers strangled by high taxes.

‘Magic circle’

Resentment within the party had also mounted at the so-called “magic circle” of Bossi’s proteges and at his son Renzo, whose grooming as the leader’s heir included a seat on Lombardy’s regional parliament.

Bossi’s resignation is likely to open a power struggle within the league, and could pave the way for the emergence of Roberto Maroni, the former interior minister, as a new leader.

A party statement said on Thursday that Maroni, together with two other senior party officials, will temporarily lead the league until a congress of the federal council is held by the autumn.

Maroni, popular grass-root supporters, has condemned the scandal and called for a thorough clean-up within the party.