The European Union has been plunged into a grave diplomatic crisis following Italian Prime Minister Silvio Berlusconi's "Nazi guard" remarks to a German member of the European Parliament.
Berlusconi says he was making an ironic joke
MEP leaders have threatened to break off relations with the EU's top decision-making body, the European Council now headed by Mr Berlusconi, unless they receive a formal apology by 1230 GMT on Thursday.
Mr Berlusconi triggered uproar in the European Parliament when he suggested that Martin Schulz, a heckling German MEP who had criticised him, would be perfectly cast as a Nazi concentration camp guard in a forthcoming film.
Germany lodged an official protest, denouncing the remarks as "unacceptable". Within hours it had summoned the Italian ambassador into Chancellor Gerhard Schroeder's office for an explanation.
A diplomatic row of this kind between two of the European Union's biggest countries is extraordinary, the BBC's Chris Morris reports from Berlin.
It comes as Italy takes over the presidency of the EU for the next six months.
The fact that the Italian ambassador was summoned to the Chancellery and not the foreign ministry, as is usual in such cases, shows the complaint came from the very top, he says.
The Italian foreign ministry later responded by summoning the German ambassador and condemned the comments made by Mr Schulz.
The Italian leader himself has offered a partial apology through an aide, after refusing to do so when asked by the president of the European Parliament.
But his deputy, Gianfranco Fini, said it would have been better if Mr Berlusconi had apologised.
"No accusation, however annoying, can justify the epithet of Nazi guard for a political adversary," Mr Fini said.
Mr Berlusconi's outburst on the first day of his six-month presidency of the EU has given ammunition to those who believe he is unfit to represent Europe in the world, the BBC's world affairs correspondent William Horsley says.
Schulz challenged Berlusconi over alleged conflict of interest in Italy
Commenting on the row, Mr Schulz told the BBC: "It's certainly very difficult for the president of the government of a state with Italy's history - with Mussolini in the past - to make ironic remarks about the victims of the concentration camps".
"Yes, I am angry," he added.
Mr Berlusconi made the remarks as he was setting out his programme for Italy's presidency of the EU.
He rounded on Mr Schulz after the German Social Democrat MEP had criticised his business and political conduct.
Mr Schulz had referred to an alleged
conflict of interest between the political role of Italy's richest man and his extensive media empire, and deplored outspoken comments on immigration by Italian Reforms Minister Umberto
"I know there is a man producing a film on the Nazi concentration camps," Mr Berlusconi exclaimed. "I shall put you forward for the role of Kapo (guard chosen from among the prisoners) - you'd be perfect."
The remark provoked instant uproar, but Mr Berlusconi refused to withdraw it.
Later on Wednesday, after Germany delivered a formal protest, the Italian leader expressed surprise that the remark had caused offence.
"I'm sorry," he said. "I am saddened that there's been a misinterpretation."