Italy's top court has definitively cleared Silvio Berlusconi of charges that he paid for sex with an underage dancer, fuelling talk of a return to the political limelight for the embattled former premier.

The ruling by the Court of Cassation brings to an end a lengthy legal saga which lifted the lid on the sordid "bunga bunga" sex parties the billionaire tycoon and former prime minister organised in his Milan villa.

It also leaves the 78-year-old, who served three terms as premier, free to resume a central role in politics at the helm of his centre-right Forza Italia party.

Berlusconi was convicted in 2013 of the most serious charges he has faced in a scandal-tainted career, only to be acquitted on appeal a year later.

The quashing of his seven-year prison term and a lifetime ban from public office triggered a counter-appeal by prosecutors to the Court of Cassation.

The billionaire businessman, whose empire includes the AC Milan soccer club, has always denied paying for sex with a 17-year-old dancer called Karima El-Mahroug who went by the stage name "Ruby the Heart Stealer."

He maintained he only tried to help the Moroccan national when she was later arrested for an alleged theft because he thought she was a niece of the then Egyptian president Hosni Mubarak.

The appeal court appeared to accept that argument when it ruled that Berlusconi had not abused his power. It also said Berlusconi had not committed a crime in having sex with Ruby as he did not know she was under 18, the legal minimum for a prostitute to sell sex in Italy.

Prosecutor Edoardo Scardaccione had told Tuesday's hearing that Berlusconi's antics had held Italy up to ridicule. "The Mubarak's niece episode was worthy of a Mel Brooks film," he said. "The whole world was laughing at us behind our backs."

Threat to Renzi

Berlusconi has just finished serving a community service order for corporate tax fraud. He was not present at Tuesday’s hearing, which analysts had billed as crucial for his ability to reassert control over his fragmenting party.

Giovanni Orsina, an academic at the LUISS business school in Rome, said the distraction of legal battles had helped Prime Minister Matteo Renzi emerge as the dominant figure in Italian politics.

"Berlusconi's clarity of mind basically disappeared (with the tax conviction)," he argued. "Since then he has been uncertain, unclear and politically ineffective."

With the Ruby case now out of the way, Orsina believes Berlusconi could inflict "real damage" on Renzi's reform agenda.

Renzi relied on support from Berlusconi to steer landmark labour reforms through parliament late last year. But their alliance collapsed last month after Renzi successfully backed an actively anti-Berlusconi candidate, Sergio Mattarella, to become Italy's new president.

While Tuesday’s ruling will galvanize the Cavaliere’s camp, it does not spell the end of his legal woes.

Berlusconi could yet be convicted on charges that he paid off many of the young women who attended his famous soirees in return for false testimony in the Ruby trial.

Also outstanding is a charge that he paid a senator three million euros ($4.0 million) in 2006 to join his party and destabilise a centre-left government.

Past experience, however, suggest the tycoon's lawyers may be able to string out both cases for sufficient time for the charges to be dropped without a judge ever making a ruling.

(FRANCE 24 with AFP)