In the final phases of the Second World War, the discredited king Victor Emmanuel III tried to raise the prestige of the monarchy by nominating his son and heir Umberto II "general lieutenant of the kingdom" and promising that after the end of the war the Italian people could choose its form of government through a referendum. A new constitution was written for the new republic, taking effect on January 1, 1948.
The referendum at the origin of the Italian republic was, however, the object of deep discussion, mainly because of some contested results.
In 1946, the main Italian political parties were:
Each party had run separate candidates in the 1946 general election, and the Christian Democrats won a plurality of votes. The PSI and the PCI received some ministerial posts in a Christian Democrat–led coalition cabinet.
Since the PSI and the PCI together received more votes than the Christian Democrats, they decided to unite in 1948 to form the Popular Democratic Front (FDP). The FDP won the municipal elections in Pescara with a ten percent increase in their vote compared to the results of 1946. The new party expected to win the upcoming 1948 general election in a similar manner.
The 1948 general election was heavily influenced by the United States as part of their ongoing effort to fight communism. In order to influence the election, the US agencies undertook a campaign of writing ten million letters, made numerous short-wave radio broadcasts of propaganda and funded the publishing of books and articles, all of which warned the Italians of what the US felt would be the consequences of a communist victory. The CIA also funded the centre-right political parties and was accused of publishing forged letters in order to discredit the leaders of the PCI.
This propaganda campaign proved successful as the Christian Democrats (Democrazia Cristiana) won the 1948 election with 48 percent of the vote, while the FDP only received 31 percent of the votes. The FDP would not win a general election for the next 40 years.
Under the 1947 peace treaty, minor adjustments were made to Italy's frontier with France, the eastern border area was transferred to Yugoslavia, and the area around the city of Trieste was designated a free territory. In 1954, the free territory, which had remained under the administration of U.S.–U.K. forces (Zone A, including the city of Trieste) and Yugoslav forces (Zone B), was divided between Italy and Yugoslavia, principally along the zonal boundary.
In the fifties Italy became a member of the NATO alliance and an ally of the United States, which helped to revive the Italian economy through the Marshall Plan. In the same years, Italy also became a member of the European Economical Community (EEC), which later transformed into the European Union (EU).
For almost four decades, Italian elections were successively won by the Democrazia Cristiana (DC) centre-right party, leading to questions regarding the workings of Italian democracy.
In the eighties, for the first time, two governments were led by a republican and a socialist (Bettino Craxi) rather than by a member of DC (which nonetheless remained the main force behind the government). The Craxi government was particularly notable for the 1984 revision of the Lateran Pacts with the Vatican, which included the end of Roman Catholicism as Italy's formal state religion.
At the beginning of the 90s the Italian political world was deeply shaken by a series of corruption scandals (collectively known as Mani Pulite, "Clean Hands") involving all the major parties, but especially those in the government coalition: between 1992 and 1994 the DC underwent a severe crisis and split up into several pieces, while the PSI (and the other governing minor parties) completely dissolved.
This "revolution" of the Italian political landscape, happened at a time when some minor institutional reforms (e.g. changes in the electoral laws intended to diminish the power of political parties) were taking place. For this reason, Italian political commentators refer to the post-1992 period as the "Second Republic", despite the absence of any major constitutional change.
In 1994 Berlusconi (allied with the Lega Nord, AN and some former Christian Democrats) won the elections,
Elections were held in 1996, and the winner was a centre-left coalition formed by PDS, Partito Popolare Italiano (Italian Popular Party; PPI, the largest surviving piece of the former DC), and other small parties, with "external endorsement" from the communists.
Thanks to the rivalries inside the centre-left coalition, and to a renewed alliance with the Lega Nord, the coalition led by Berlusconi (Forza Italia, AN, Lega Nord, "pieces" of the former DC) won the 2001 elections, and Berlusconi is the current Italian prime minister (December 2005).