JOIN USThe embattled 75-year-old won a vote on Italy's 2010 public accounts -- a precondition for the approval of any future budgets -- by 308 votes in favour with one abstention after the opposition refused to vote.
The result was below the absolute majority of 316 seats required for a stable government, leaving the centre-right coalition in an extremely weak position.
"The government no longer has a majority in this chamber," Pier Luigi Bersani, leader of the main opposition Democratic Party, said after the vote.
Addressing Berlusconi, he added: "Hand in your resignation."
The premier's main coalition partner had called for his resignation ahead of the vote, with a nervous Europe watching on as political consultations also continued in crisis-hit Greece over the formation of a new cabinet.
"We have asked him to step aside," Northern League party leader Umberto Bossi, a long-term ally of Berlusconi from the early 1990s, told reporters.
"We're in the eye of the global storm... Italy needs international credibility," business daily Il Sole 24 Ore said in an editorial.
Global markets were focused on the political crisis playing out in Italy, the third-biggest economy in the eurozone, while European Union ministers held talks in Brussels in which they voiced concern about the situation.
In Brussels, Austria warned Italy was too big to bail out, saying it could not rely on "help from outside" because of the size of its economy.