Left claims razor thin victory in Italian poll
The slim margin of victory could return Italy to political paralysis and instability, however.
Mr Berlusconi has not conceded and he called for a recount in the lower Chamber of Deputies, where final results gave Mr Prodi's coalition a razor-thin margin.
While the Interior Ministry had not declared a winner, near-final returns indicated Mr Prodi's coalition had captured the Senate, parliament's upper chamber, giving him the victory he needed in both houses.
The tally depended on the six Senate seats being decided by Italians living overseas. Near complete returns indicated Mr Prodi's allies had captured four of them.
Earlier, Mr Prodi told a news conference his government would have "constructive relations" with the US and predicted that financial markets would "welcome with favour" his leadership.
He said he was not concerned about Mr Berlusconi's recount call and conceded his margin was thin. But he denied that the country was "split in half," saying previous governments have been weaker.
"Today we turn a page," Mr Prodi said.
"We leave behind the sourness of long and difficult electoral campaign. We need to start immediately to repair the tears that were produced in the country."
Final returns showed Mr Prodi winning the lower Chamber of Deputies by one-tenth of a percentage point: 49.8 to 49.7%.
Under Italian electoral law, 55% of seats are awarded to the overall winner regardless of the scale of victory, giving Mr Prodi's forces at least 340 seats in the 630-member lower house.
According to official returns, Mr Berlusconi's conservative allies held a one-seat advantage in the Senate, with 155 seats to Prodi's 154. But with some 852 overseas precincts out of 896 reporting, returns indicated Mr Prodi's forces would capture another four seats, while one seat would go to Mr Berlusconi's allies and one to an independent.
The Interior Ministry stressed that even the results it had released were provisional. It said Italy's highest court would have to confirm the results and that parliament's election committees would have to rule on any challenges.
Mr Berlusconi's spokesman, Paolo Bonaiuti, contested the victory claim and called for a recount in the lower house, saying the difference in the chamber amounted to less than 25,000 votes. Voter turnout was about 84%.
"Such a narrow difference demands that there be a careful verification of the vote count," he said.
"These results mean the country is divided in two. There needs to be a provisional government for a few months then new elections," said Marco Piva, a banker from Padova, as he took the train into work. "This is the worst result that we could have had."
The Senate and lower chamber of parliament have equal powers, and any coalition would have to control both to form a government.
Even if one coalition controls both chambers, it would find it extremely difficult to pass legislation with such a slim majority, returning Italy to instability after Mr Berlusconi's five years in power.
Mr Berlusconi, a 69-year-old media mogul who is Italy's longest-serving premier since World War Two, was battling to capture his third premiership with an often squabbling coalition of his Forza Italia party, the former neo-fascist National Alliance, pro-Vatican forces and the anti-immigrant Northern League.
The 66-year-old Mr Prodi, a former premier and EU chief, was making his comeback bid with a potentially unwieldy coalition of moderate Christian democrats, greens, liberals, communists and former communists.
Italians were mainly preoccupied with finances. Mr Berlusconi, a billionaire businessman whose empire includes TV networks, insurance and real estate, failed to jump start a flat economy during his tenure, but promised to abolish a homeowner's property tax.
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