BBC Rome Correspondent Orla Guerin:

A Turkish government spokesman told Reuters news agency that if Italy continued to refuse, then Mr Ocalan should be prosecuted for terrorism in a third country such as Italy or Germany.

"Ideally, we want him to be prosecuted and punished in Turkey as the country on which his terrorist activities were inflicted.

"But if this does not happen, he should be prosecuted under international law against terrorism and punished in a third country such as Italy and Germany," said Ahat Andican.

The move came on the day the Turkish Government suffered a defeat in a confidence motion.

It also coincided with an offer by one of Mr Ocalan's Italian lawyers for his client to offer an unconditional end to armed struggle, in return for Turkey's granting of full democratic rights to the Kurdish people and respect for their language and culture.

Germany fearful of Kurd wrath

A Kurdish supporter of Mr Ocalan in Germany

Italy has rejected the Turkish extradition request for Mr Ocalan because Italian law bars it from returning suspects to countries where the death penalty stands, as it does in Turkey.

But it has been pressing Germany to act on an arrest warrant it has long had out on Mr Ocalan for incitement to murder.

But a senior member of Germany's governing Social Democrats has said Germany should not do this, in case it leads to violence within the large Turkish immigrant community, which includes Kurds.

"The government ... has to act in the interest of the nation and consider what negative consequences would be connected with an extradition request," said the head of the parliamentary foreign affairs committee, Hans-Ulrich Klose.

"The danger of the ugly Turkish war being carried into Germany can't be dismissed out of hand," he said.

Mr Ocalan is currently held at a secret location in Italy under house arrest while the authorities consider his request for political asylum.