By James Mackenzie
ROME (Reuters) - Former Italian Prime Minister Silvio Berlusconi confirmed on Wednesday he would not lead his People of Freedom (PDL) party in next year's election, ending months of speculation about his political future.
The 76-year-old media magnate said this month he might not stand if withdrawing his candidacy could help centrist and center-right parties come together to form a "moderate" bloc.
But his statement on Wednesday went further, suggesting that a career in frontline politics that began in 1994 may be coming to an end.
"I will not stand for premier again but I remain at the side of younger people who can play and score goals," said the owner of AC Milan football club, who quit as prime minister in November last year during a mounting financial crisis.
"I still have good muscles and some good sense but my role will be to give advice."
The flamboyant Berlusconi, whose reported "bunga bunga" parties won worldwide notoriety, has taken a largely backseat role in politics since he was forced to step down, but he remains the dominant figure within the PDL.
However, his standing with the general public has fallen sharply after an array of sexual and political scandals and an opinion poll last month gave him just 18 percent support, well behind Angelino Alfano, the PDL's party secretary.
The former justice minister, who celebrates his 42nd birthday next week, is the favorite to take the center-right into the election, which must be held no later than April.
However Daniela Santanche, a Berlusconi loyalist from the right wing of the party, said she would also run in a primary ballot to select the candidate for prime minister, which Berlusconi suggested could be held on December 16.
Alfano, considered a moderate, has struggled to contain vicious factional infighting in the party. He faces an early test on Sunday with local elections in his home region of Sicily, which has flirted with bankruptcy this year.
His job has been complicated by corruption scandals which have hit center-right governments in the northern region of Lombardy and in the Lazio region around Rome and further damaged the already dismal image of Italy's political class.
Given Berlusconi's long record of surprises and turnarounds, his statement may still not be the final word, but it was widely welcomed by senior figures in the PDL.
"This move to stand down permits the Italian system as a whole, the government and the political parties, to move forward," former Foreign Minister Franco Frattini said after the statement.
Berlusconi's departure may also make it easier for the PDL to form an alliance with centrist forces which have been deeply suspicious of the former premier as well as others such as its estranged former partners in the pro-devolution Northern League.
The financial crisis facing Italy has eased in recent weeks but markets have been watching closely for signs of what government might emerge after technocrat Prime Minister Mario Monti stands down.
The political situation remains exceptionally confused, with the main parties unable to agree even on an electoral law that will govern next year's ballot, but opinion polls suggest the center-right will struggle.
A survey from the SWG institute last week put PDL support at 14.3 percent, behind the center-left Democratic Party (PD) on 25.9 and the anti-establishment 5 Star Movement of comic Beppe Grillo on 21.
Monti, a former European Commissioner often seen as a potential President of the Republic, sought to ease fears of instability after the election, saying Italy's partners should "please relax".
He said whichever government came after his own would have to respect the commitments Italy had made to the European Union.
Outside Italy Monti is widely perceived to have done a good job since taking over from Berlusconi, but the country remains in deep recession with the economy expected to contract 2.4 percent this year.
(Reporting By James Mackenzie; Editing by Robert Woodward and Andrew Osborn)