ROME (Reuters) - Former Italian Prime Minister Silvio Berlusconi said on Tuesday he was ready to drop plans to lead the centre-right in next year's parliamentary election and did not rule out a second term for Prime Minister Mario Monti.

"Silvio Berlusconi has always said and continues to say that he is ready to stand aside to allow all moderates to unite in a single force which can face the left together," he told his own Canale 5 television network.

Italy's former Prime Minister Silvio Berlusconi (L) waves as he arrives for a meeting of the European People's Party (EPP), ahead of a two-day European Union leaders summit, in Brussels June 28, 2012. REUTERS/Sebastien Pirlet

"I have always wanted the good of the country I love, I have never had any personal ambition," he said.

He declined to say who would lead his People of Freedom (PDL) party in the election if he did step aside but did not exclude a centre-right government led by Monti, who has ruled out standing for election but said he would be willing to serve a second term if asked.

"Absolutely, I would not rule out it being Mario Monti. Ever since I've known him he has always been in the liberal camp, so it could easily be Mario Monti," he said.

The decision could remove a major obstacle to the creation of a centre-right force running from the PDL to the centrist UDC party led by Pier Ferdinando Casini and even the small Future and Liberty for Italy (FLI) party created by Berlusconi's estranged former ally Gianfranco Fini.

The smaller centrist parties have been unwilling to accept joining a coalition led by the scandal-plagued Berlusconi, who has been Italy's dominant political figure for the past two decades.

The secretary of Berlusconi's People of Freedom (PDL) party, Angelino Alfano, on Monday raised the prospect of Berlusconi stepping aside.

Casini said on Monday that Berlusconi's repeated record of "turnarounds" meant that he would be very cautious in responding to the invitation to an alliance.

The confused political situation in Italy, the euro zone's third largest economy, has been a source of concern on financial markets which have been worried about a weak and unstable government emerging from the election, due no later than April.

Berlusconi, forced to step down last year in the middle of a mounting financial crisis, has hinted several times he planned a return to the political front line but has never clearly confirmed his intentions.

The PDL, trailing badly in the opinion polls, has been in disarray with deep splits between diehard Berlusconi loyalists and others including centrist supporters of the Monti government who want to create a conventional European centre-right force.

Italy's centre-left will hold a primary election in November to pick its election leader.

The main candidates are leader Pier Luigi Bersani, head of the Democratic Party, the largest centre-left force, Matteo Renzi, the 37 year-old mayor of Florence and Nichi Vendola, leader of the Left, Ecology and Freedom party.

(Reporting By James Mackenzie)

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