Italian Prime Minister Silvio Berlusconi alleged described Italy as a “shit country” during a taped phone call with a suspect, adding that he was “sickened” and would soon be moving away.

Berlusconi faced renewed scandal on Thursday after a businessman linked to a 2009 prostitution case was arrested on suspicion of extorting hundreds of thousands of euros from the Italian prime minister.

Giampaolo Tarantini, an entrepreneur from the southern city of Bari, and his wife Angela Devenuto were arrested after payments from Berlusconi totalling as much as half a million euros were uncovered by investigators, prosecutors said.

A warrant was also issued for another man, Valter Lavitola, who prosecutors said was a consultant linked to defence and aerospace group Finmeccanica.

The arrests return the spotlight to a prostitution scandal which dominated headlines in 2009 when Patrizia D'Addario, an escort connected with Tarantini, claimed to have been paid to attend parties at Berlusconi's private residence in Rome.

The prime minister told Italian news agencies on Thursday that the case was "pure fantasy", repeating previous statements that he had been simply helping Tarantini out of financial difficulties.

He also shrugged off case documents containing a transcript of a conversation in which he is alleged to have said he was going to leave Italy.

According to the prosecution transcript seen by Reuters, Berlusconi told Lavitola during the taped phone call on July 13: "In a few months I'm going to go away ... go away from this shit country ... of which I'm sickened."

On Thursday, Berlusconi said publicly that he would remain in the country to bring about change.

The fresh scandal comes at a time when Berlusconi's centre-right government is struggling to tie up a revised 45.5 billion euro austerity package designed to reassure anxious markets about the solidity of Italy's strained public finances.