Italy's Prime Minister Silvio Berlusconi faces a key vote on public finances in the country's parliament on Tuesday amid heavy pressure to resign.

The vote is scheduled to be on routine budget matters, but it is seen as a major test to determine whether the Italian Prime Minister can still gather a majority which will enable him to stay in power and implement vital austerity measures.'

Interest rates on the Italy's debt rose on Tuesday to 6.74%, the highest since the introduction of the euro more than a decade ago and nearing levels that have led to bailouts elsewhere, The New York Times points out.

A day before the vote, Berlusconi disproved reports of his imminent resignation. In a statement reported by the ANSA news agency, Berlusconi said talk of his resignation was "without foundation and I do not understand how it got around."

Speculation over his immediate political future remained intense as Italy seemed set to come under renewed pressure from global markets over its response to the euro zone debt crisis,.

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