Conservative billionaire Silvio Berlusconi was on course yesterday to win Italy?s parliamentary election and secure a third term as Prime Minister, according to exit polls.

Exit polls have not always proved reliable in Italy. One survey for Sky TV after two days of voting ended gave Berlusconi a 2 percentage-point lead over centre-left rival Walter Veltroni in the lower house and a 3-point lead in the upper house.

A second poll for state television also put the 71-year-old media magnate ahead in both chambers. The exit polls have a margin of error of two percent.

Berlusconi has vowed to cut Italy?s public debt, trim taxes and liberalise the highly regulated services sector. But many Italians fear political instability will prevent the next government reviving an economy on the brink of recession.

?The winner of the elections will have to clear up the mess that the country?s in and get the economy moving again, and none of them seem to have the imagination, vitality or the majority to do it very well,? said politics professor James Walston.

Exit polls failed to predict accurately the outcome of the last parliamentary election in 2006 and do not indicate the final balance of power in the Senate, where seats are calculated on a regional rather than national basis.

Berlusconi, who was Prime Minister for seven months from April 1994 and from 2001-2006, had been forecast by opinion polls to secure a majority in the lower house. The Senate race was always bound to be closer due to the complex voting system.

Romano Prodi, who beat Berlusconi in 2006, resigned in January 20 months into his five-year term after his narrow majority evaporated and his coalition collapsed.

Prodi?s successor as leader of the Democratic Party, former Rome Mayor Veltroni, who is 52, put up a stiff challenge to Berlusconi, who dominates Italy?s media via his ownership of private broadcaster, Mediaset.

Some of Italy?s 47 million voters complained there was little to choose from between the two platforms. Both pledged to reduce public debt ? the third highest in the world in absolute terms ? but also cut taxes to boost spending and growth.

Up to a third of voters were undecided until the last minute and the nation went to the urns in a despondent mood, tired of the squabbling politicians and chronic political instability.