Berlusconi is accused of trying to concentrate power in his own hands
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Italy's Senate has backed a series of sweeping constitutional reforms to strengthen the prime minister's role while devolving power to the regions.
The measures are fiercely contested by the centre-left opposition, which says they undermine national unity.
The Northern League, a member of the centre-right coalition government, has threatened to pull out if the reform package is not passed.
The bill has to be approved twice by each house of parliament.
It will then probably have to be put to a referendum.
If passed, it will be the most significant change to the constitution's framework since the end of World War II.
The vote came a day after the parliament's lower house approved media reforms that critics say are designed to enrich Prime Minister Silvio Berlusconi's own TV and publishing empire.
Government relief
Under the planned constitutional changes, control of education, health and local policing will be devolved from Rome to the regions and the upper house of parliament will become a chamber of regional representatives.
The Northern League's Bossi could leave the coalition
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These were key demands of the Northern League, which wants more power for the country's wealthy northern areas.
Correspondents say the vote will help ease tensions within the government ahead of European and local elections in June.
The law would also bring many changes to the position of prime minister, who is now chosen by the president in consultation with parliament.
He would be directly elected and be able to hire and fire ministers as well as dissolve parliament - a power now lying with the president.
Supporters say the reforms will create a political system that is closer to the people and more stable while speeding up a sluggish legislative process.
But opposition senators accused Mr Berlusconi of seeking to concentrate power in his own hands.
"Shame on you," they shouted as the Senate voted.
The opposition says the bill could fracture Italy's national unity and set Italians against one another.
They are also concerned about the impact of the federalist measures on Italy's poorer, southern regions.