The governor of the Italian region of Lazio has resigned amid a scandal over the alleged embezzlement of public funds, which were reportedly used to buy cars, holidays and expensive dinners.

Calls for the resignation of Renata Polverini, who was backed by Silvio Berlusconi, had grown amid public anger after photos were published of a bawdy toga party hosted by a member of Lazio's regional council, where men wearing pig masks fondled female guests.

The scandal is set to reinforce voters' views of Italy's elected officials as overpaid and corrupt, increasing doubts over their ability to gain office and govern effectively next year, when Italy's technocrat government headed by Mario Monti is expected to step down.

"Polverini's resignation cannot reduce Italy's trust in their political parties because it is already at zero," said Roberto D'Alimonte, a professor of politics at LUISS university in Rome.

"This will also weaken Silvio Berlusconi's chances of resurrecting his Freedom People party," he added, "while the Democratic party isn't coming out of this well because it failed to criticise the use of funds in Lazio, even if its regional councillors did not appear to benefit."

Polverini's predecessor, Piero Marrazzo, a Democratic party candidate, had stepped down after he admitted frequenting transsexual prostitutes.

In the latest scandal, Franco Fiorito, a former top official of Berlusconi's Freedom People party in Lazio, is being investigated on suspicion of embezzling up to €1m (£795,000) in public funds and allowing fellow officials to rack up huge expense claims. He has said Polverini was aware of the misuse of funds, although she denied that on Monday, condemning councillors as "thieves".

The scandal coincides with signs Berlusconi is seeking a comeback at elections in 2013 following his resignation last November. In an interview with the Huffington Post's new Italian offshoot on Tuesday he denounced Germany as a "hegemonic state", which is he said was seeking to dictate rules on austerity to the rest of Europe.

Berlusconi's bid to return to power could yet be thwarted by the infighting within his own party, which observers said was behind the whistleblowing at Lazio. Control of the centre-left Democratic party is also being contested by factions.

Monti said on Monday that the parties' inability this year to push through a promised law clamping down on corruption was "inexcusable".

The chief economist of the Organisation for Economic Co-operation and Development, Pier Carlo Padoan, said on Monday he was "worried about the political uncertainty" in Italy.

D'Alimonte said the Lazio scandal could weaken Berlusconi to the extent that he throws his weight behind a coalition government next year, with Monti staying on as prime minister.

"But it might be harder to form that coalition if the traditional parties suffer from these scandals – and that is a scenario the markets really fear," he said.