(ANSA) - Rome, July 29 - Italy's 24.9-billion-euro austerity budget was approved Thursday as tensions in the ruling People of Freedom (PdL) party peaked between its co-founders, Premier Silvio Berlusconi and House Speaker Gianfranco Fini.

Approval of the package of spending cuts and wage freezes was seen as a prelude to a showdown between the pair, who have been sniping for weeks.

A meeting of the PdL executive is scheduled for Thursday night when a document of censure against Fini is on the agenda. Observers say Berlusconi might even ask him to leave the party.

The government is not in danger because Fini can count on only two dozen or so loyalists in both houses, where the PdL and its ally the Northern League have wide majorities.

League leader Umberto Bossi on Wednesday night said a split was inevitable.

"Each will go his own way," he said.

The two, who ignored each other during the budget vote, have barely been on speaking terms since an April bust-up when Berlusconi demanded Fini step down as speaker or stop allegedly abusing a supposedly impartial position.

"And what if I don't, will you throw me out," Fini said in an unprecedented clash captured by TV cameras.

More recently, the premier instructed ministers to stop appearing on TV talk shows with Fini loyalists to avoid rows.

The Speaker has long been asking for more freedom of speech within the PdL on issues such as immigration, where he holds more liberal views than others, and Italy's restrictive assisted fertility laws.

Things have come to a head recently as Fini refused to back the premier's defence of PdL heavyweights named in graft probes connected to reconstruction after last year's l'Aquila earthquake and an alleged secret club, dubbed the P3 after the outlawed P2 lodge of the 1980s, accused of influence-peddling.

Berlusconi has not attacked the Speaker directly, reportedly to keep international markets calm as a budget aimed at getting Italy's deficit into line with eurozone rules neared approval. But the rightwing press close to the premier has frequently called him "a traitor".

Fini's recent statements calling for a harder line on corruption have come while the PdL has seen two ministers and an undersecretary resign.

Industry minister Claudio Scajola resigned in connection with a real-estate deal linked to the quake probe in May while short-lived federalism minister Aldo Brancher quit ahead of a two-year conviction, handed down Wednesday, for embezzlement in a bank takeover.

Industry undersecretary Nicola Cosentino stepped down after being linked to a sex dossier, never in fact used, against then rival candidate Stefano Caldoro, now governor of Campania, the region around Naples. Denis Verdini, one of the PdL's national coordinators, has also faced calls to quit over the P3 probe, as has Justice Undersecretary Giacomo Caliendo.

Amid the probes, Berlusconi's approval ratings have slid to 39 points, ten points below a year ago.

Some analysts think the premier might call a snap election early next year to reassert his authority and not let the bickering continue until the end of the legislature in 2013.

Berlusconi and Fini launched the PdL for the last general election in 2008, with Fini merging his rightwing National Alliance party with Berlusconi's larger Forza Italia party. BUDGET AIMS FOR 2.7% DEFICIT IN 2012. The budget approved Thursday, after a confidence vote on Wednesday, aims to bring Italy's budget deficit, which was 5.9% of GDP last year, below the eurozone's mandatory 3% deficit-to-GDP ratio by 2012.

It includes a raft of spending cuts and a three-year freeze on public-sector pay - although MPs also voted to snip their own lavish salaries.

Among the other moves is the forgiveness of fines on breaking European Union milk production quotas, a measure the European Commission has vowed to fight.

The austerity package has sparked protests from teachers, firemen, doctors, police, magistrates and, most recently, Italian diplomats around the world.

Pensioners, theatre companies and regional governors have also been at the forefront of opposition.