Silvio Berlusconi has said that his centre-right party had split from Italian Prime Minister Enrico Letta's ruling coalition.
He said that he did not have the numbers to bring the Italian government down.
A group led by Interior Minister Angelino Alfano, former secretary of his People of Freedom party defected yesterday.
This group defied Mr Berlusconi and formed a separate group that has pledged to remain in the government.
Mr Berlusconi said his impending expulsion from parliament, with the support of Mr Letta's centre-left Democratic Party, meant the coalition could not continue.
Mr Berlusconi said: "It's very difficult to think you can remain allies in parliament and above all seated at the same table in cabinet with someone who wants to kill your leader politically,"
Mr Alfano's group, expected to include a couple of dozen lawmakers, should ensure enough support in parliament for Mr Letta, who survived a confidence vote last month with the help of the PDL rebels.
"At this moment, after the decision taken by 23 of our senators on 2 October, we were not capable and we are not capable of bringing down the government," Mr Berlusconi said.
The 77-year-old billionaire's political future has been in the balance since he was convicted of tax fraud in August, opening the way for his expected expulsion from parliament.
The Senate is due to vote on 27 November to confirm the step and the Democratic Party has said it will vote for expulsion.
Mr Letta's Democratic Party formed an awkward coalition with the PDL following an inconclusive national election in February that left neither able to form a government on its own.
Mr Berlusconi said Mr Alfano's decision to form a new bloc had "caused him a lot of pain", prompting members of his audience to yell "traitors".
However, he struck a conciliatory note, urging supporters to avoid hostility towards the new grouping of his former political heir.
"This group, even if it seems like it is supporting the left, will have to necessarily be part of the centre-right coalition," he said.
The billionaire politician is furious at a conviction he says was politically motivated.
He has been further aggravated by the rebellion, which has been the most serious threat to his authority since his entry into politics two decades ago.