EUOBSERVER / BRUSSELS - The populist right-wing party of Italian Prime Minister Silvio Berlusconi on Friday officially merges with the post-fascist Alleanza Nazionale at the founding congress of Il Popolo della Liberta, the powerful new rightist bloc that is not only set to dominate Italian politics for the foreseeable future, but will also wield considerable power in the European Parliament after the June elections.

Mr Berlusconi says goodbye to Forza Italia and hello to a new bloc with the post-fascist Alleanza Nazionale

A three-day, €3 million extravaganza, with jumbotron screens and menus is to celebrate the fusing of the two parties, a long-expected move that brings Mr Berlusconi one step closer to his dream of a unified Italian right.

The Italian leader will become the head of Il Popolo della Liberta (People of Freedom), although his ambitious rival and chief of the now disbanded Alleanza, Gianfranco Fini has indicated he has his sights on the leadership should Mr Berlusconi exit the stage.

"Berlusconi knows that his strong and recognised leadership can in no way become a personality cult," Mr Fini, also the speaker of the Chamber of Deputies, the Italian parliament's lower house, told the final conference of his own party.