By Massimiliano Di Giorgio
ROME (Reuters) - Italy's ruling Democratic Party (PD) on Monday cancelled a meeting with the anti-establishment 5-Star Movement (M5S) to discuss fundamental reforms, with each side blaming the other for the failure to meet.
The setback with M5S may increase the chances that Prime Minister Matteo Renzi will concentrate on sealing a deal with centre-right leader Silvio Berlusconi to help push through changes to Italy's political system.
The agreement to meet was a U-turn for former comedian Beppe Grillo's M5S, which had previously refused to talk to traditional parties. It potentially gave the PD an alternative partner with whom to negotiate reforms instead of its historic rival Berlusconi.
The electoral system is widely blamed for creating political deadlock, contributing to widespread voter disillusionment that helped propel Grillo's party to 25 percent of the vote in its first general election last year.
Renzi's PD said M5S had failed to provide written responses to 10 proposals which the PD said had to be part of a reform package. But later on Monday the M5S published answers on Grillo's blog, saying that it accepted all the pre-requisites.
One of the M5S's most prominent members, vice president of the chamber of deputies Luigi Di Maio, expressed regret that the meeting had not occurred.
"We are sorry to have missed an important opportunity. Our ideas are clear - on the other side there is a lot of confusion," Di Maio told a news conference in Rome.
Renzi reached a preliminary agreement over the electoral law and abolishing the Senate as an elected chamber with Berlusconi in January, but Berlusconi has threatened to pull out of the deal several times, and the proposals have made slow progress in parliament.
Beppe Grillo said on his blog that Renzi clearly preferred closed-door meetings with Berlusconi and wanted to isolate M5S.
"We see that a democratic and transparent debate is impossible in Italy today," Grillo wrote. "The M5S represents millions of Italian who cannot be treated like pariahs."
He said M5S was still open to discuss reform proposals.
Grillo's party came second to the PD in European elections in May, losing ground after its resounding success in the general election, but still more than four percentage points ahead of Berlusconi's Forza Italia.
M5S's electoral reform proposal aims to ensure representation for small parties but it also includes a run-off between the two highest scoring parties if neither gets 51 percent in the first round, and a bonus of extra seats for the victor.
The two-round system is an aspect insisted on by Renzi which M5S had previously rejected.
(Writing by Isla Binnie amd Gavin Jones; Editing by Robin Pomeroy and Sonya Hepinstall)