Rome - Italy's second-biggest governing coalition party, the Alleanza Nazionale, formally disbanded Sunday as it prepared to fuse with Prime Minister Silvio Berlusconi's Forza Italia as a new People of Freedom (PDL) alliance including the right-wing Lega Nord.

Gianfranco Fini, leader of the party since its foundation in 1995 and current of President of the Italian Chamber of Deputies, announced the formal dissolution.

The annoucement came at the end of the final congress of the party that has campaigned under the former Fascist Fiamma Tricolore symbol combining Italy's national colours in the form of a flame.

Fini told the 1,800 delegates in Rome that the PDL would be broad- based, multi-faceted party "in which certain values of the right will account for additional inspiration".

Italian Defence Minister Ignazio La Russa, who had been acting president of the now dissolved party, had assured delegates Saturday that "we won't be disappearing."

But observers said the feeling among delegates was mixed - some eagerly anticipating fusion with Berlusconi's party, others regretting what amounted to a Forza Italia takeover.

La Russa stressed in his address Saturday that the spirit of the party would live on as "the right wing of the new PDL, continuing to practise the right values."

The Alleanza Nazionale was founded by Fini - who once described erstwhile Italian dictator Benito Mussolini as "the greatest statesman of the century" - in 1995 from remnants of the neo-Fascist Movimento Sociale Italiano, or Italian Social Movement.