By Barry Moody
ROME (Reuters) - The remarkable success of Prime Minister Mario Monti, feted as a hero both at home and abroad, has created turmoil among Italy's discredited politicians and is likely to provoke radical shifts in the political landscape over the coming year.
Some analysts say the impact of Monti will spark a political revolution comparable to the "Clean Hands" corruption probe -- whose 20th anniversary is this week.
That scandal swept away the old order, sending hundreds of politicians to jail and forcing Bettino Craxi, the dominant figure of his era, into exile in Tunisia where he died.
"The whole Italian system is in transition, linked to Monti's success and the European environment...there is a crisis in the parties," said a senior centre-left politician who asked not to be named.
"It is not possible for the existing parties to get back into power, that is why they are worried," said a senior official in Monti's government. "I don't expect any old (political) vehicle to be a vehicle in the future."
When Monti was appointed to head a technocrat government in November, with Italy on the brink of an economic catastrophe that would likely have killed the euro, there were predictions the politicians would only give him a few months to calm markets before forcing an early election. Rightist politicians talked of "pulling out the plug."
That talk is history. Scarcely anybody now believes there will be elections before scheduled in spring 2013, including Monti's discredited predecessor Silvio Berlusconi, whose scandal-plagued final months had destroyed confidence on the markets.
Politicians are scrambling to form new groups and find a figure who could credibly replace Monti, with his Industry Minister Corrado Passera, former head of bank Intesa Sanpaolo, being widely mentioned.
The centrist UDC party and others have even suggested Monti himself should carry on to mend the economy after 2013 despite his vow to step down. There are wide predictions however, that he will become head of state when President Giorgio Napolitano-architect of the technocrat government-steps down next year.
Italy's borrowing costs, which rose to untenable levels under Berlusconi, have receded since Monti took over from a red line of above 7 percent to 5.5 percent.
Nobody suggests Italy is in the clear, facing a huge debt, sharp recession and stagnant growth. Moody's followed other ratings agencies in downgrading the country on Monday.
But on the markets, where image and psychology are so important, the contrast between the sober, professorial Monti and the flamboyant Berlusconi could not be more stark.
Time magazine's latest European edition, on the stands as Monti was greeted warmly by U.S. President Barack Obama in Washington, put the prime minister on the front with the headline: "Can this man save Europe?"
Just three months before Time fronted Berlusconi with the title: "The man behind the world's most dangerous economy."
Despite pouring bitter austerity medicine down the throats of Italians in a swift raft of policies, Monti, welcomed as a new type of effective, fair and no-nonsense leader, remains popular at home with a rating of around 60 percent.
Politicians, bankers and officials say Monti's intellectual prestige as a former European Commissioner has put Rome back on the euro zone top table with Germany and France where he is able to protect Italy's interests in a way Berlusconi could not.
"Monti is at the same level as (Chancellor Angela) Merkel and (President Francois) Sarkozy. Berlusconi was 27th in Europe," said the centre-left official.
From this position, Monti - who Italians believe knows more about both Europe and economics than his counterparts - has pushed back against Germany's rigid drive for debt reduction, advocating more attention to growth and flexibility.
All this creates a big problem for the old political order, which was already despised by much of the population and dismissed as a self-serving "caste" before Monti took power. One pollster puts their general approval rating at 12 percent, with a wave of recent corruption scandals aggravating the contempt.
Monti is an act they cannot follow without dramatic changes.
"Italians will not put up with business as usual. The combination of incompetence and corruption has discredited the whole political class," said Professor James Walston of the American University in Rome.
"I believe that after Monti everything will be different," said a politician close to Berlusconi.
To meet this crisis in time for next year's election, the divided politicians on both right and left are in tumult, maneuvering to present a new face to electors.
Sources close to Berlusconi say he would like to form a broad centrist alliance incorporating groups from his own PDL party -- widely expected to splinter -- centrists and the centre-left Democratic Party whose right wing is said to be uncomfortable with the left--heirs of the former communists.
"After Monti the parties must present new faces and perhaps new organizations to relegitimize politics which today is delegitimized and which could be further delegitimized by the success of Monti," said the politician close to Berlusconi.
The election of mayors from outside the major parties in Milan and Naples and other local political developments are all seen as signs of momentum towards major changes.
Some politicians suggest other ministers in Monti's government apart from Passera could emerge next year as prime ministerial candidates.
Despite the euphoria about Monti, however, an entirely new political order, rather than a reworking of the existing one with new faces and alliances looks unlikely.
"I don't see the politicians saying we really have to unite to save the country, I see them saying okay now it is time to divide up the pie," said Professor Erik Jones of Bologna's Johns Hopkins university, adding that it was too difficult and expensive to build a completely new political formation.
(Additional reporting by Giselda Vagnoni and Paolo Biondi; Editing by Jon Boyle)