(By Denis Greenan). Rome, April 26 - Tapped premier Enrico Letta's new left-right reform government is expected to be sworn in Saturday, sources among his staff said Friday. Letta has been tasked by newly re-elected President Giorgio Napolitano to forge an unprecedented alliance between his centre-left Democratic Party (PD) and Silvio Berlusconi's centre-right People of Freedom (PdL) party to tackle deep economic woes and pass long-awaited reforms including giving Italy an electoral law to produce a clear winner. A general election in February produced a hung parliament and two months of stalemate. Letta, 46, acting PD leader after the recent resignation of Pier Luigi Bersani over a double failure to get his candidates elected president, is mulling who should be in his 18-strong ministerial team amid opposition from both the PD and PdL to some of the touted names. On Friday Letta, a moderate who has a solid working relationship with senior centre-right figures, reported back to Napolitano on his government-formation bid. The pair spoke for more than two hours. The PD officially backs the government unconditionally, despite rumblings from its left wing, but the PdL on Thursday laid down a number of conditions including the rebate of unpopular property tax IMU. Berlusconi appeared to contradict his party secretary, Angelino Alfano, by saying Friday there were "no real problems" facing Enrico Letta. "We can't expect a 100% deal but my people were very encouraged" by the meetings, the three-time premier and media magnate said. Berlusconi stressed "there aren't any knots to be untied". However, a senior PdL member, ex-minister Renato Brunetta, later said the IMU issue was a still a deal-breaker. "We consider this tax on homes abhorrent," Brunetta said. The PD has so far only agreed to easing IMU for economically worse-off home-owners. It has ruled out Berlusconi's election pledge to refund last year's take, saying it would wreck the budget. Berlusconi also said Friday he would not be a minister in Letta's government. He said Napolitano expected "the new generation and a significant presence of women" in Letta's team. "If I had been needed I would have been available but I prefer it this way," Berlusconi said. Many in the PD are unhappy about some of the PdL names being touted as ministers and the PD leadership has said it will eject any rebels who vote against Letta. But Florence Mayor and top PD leadership contender Matteo Renzi said the party should think hard about this. "It is premature to say 'I won't vote for him' and to be answered with 'OK, you are expelled'," he said. Renzi encouraged all the PD to listen to Letta, saying: "I know him and admire him. He seems capable and also able to bring together this assembly of odd characters that would make up this 'government of service'. I believe the majority of the party will back him, and it's an excellent solution". According to a poll out Friday, almost three-quarters of Italians believe the PD risks splitting. The PdL edged up 0.2% to 27% in research agency SWG's weekly poll while comedian-turned-politician Beppe Grillo's anti-establishment 5-Star Movement (M5S) gained 1.5% to 25.5% and the PD slumped five points to 22% after its recent turmoil. The poll said 71% of Italians want to go back to the polls once the electoral law is changed. The PD and the PdL are the two biggest parties in parliament, having got about 30% each in February. M5S, which got 25% of the vote, is refusing to work with them. Letta appealed to M5S Whips to "thaw" Thursday. They rebuffed the plea but said they would vote measures on their merits. As well as a new electoral law, the government is expected to cut the number of MPs, turn the Senate into a regional chamber, pass urgent measures including tax breaks to boost the economy and create jobs, and possibly try to reform the justice system. Italy is in its deepest recession for 20 years and unemployment has hit new heights. Grillo issued a fresh blast of invective Friday against the forced government marriage which Napolitano is brokering after parties managed to persuade him to return for a second seven-year term. The Genoa comic called it "an orgy worthy of the best bunga bunga (sex parties)" allegedly hosted by Berlusconi. He said the government "is verging on incest" because Enrico Letta is the nephew of veteran Berlusconi aide Gianni Letta. "They're all passive in the orgy except for one who knows all about bunga bunga," Grillo said. Berlusconi is on trial for having sex with an underage prostitute called Ruby. He allegedly had a stable of more than 30 young women accused of prostitution. He is also appealing a four-year conviction for tax fraud on film rights bought by his Mediaset empire. He is trying to have the cases moved from Milan to Brescia for alleged judicial bias.