ITALIAN lawmakers are debating solutions to the conflict of interest between Prime Minister Silvio Berlusconi's political role and his considerable business interests.

On Oct. 8, the government made public a report by three experts appointed by Mr. Berlusconi to study the conflict-of-interest question. They recommended that he separate himself more fully from his Fininvest company, which he described during this year's election campaign as the country's second-largest business, after the Fiat automaker.

The election to Parliament of a powerful businessman who owns three national television networks and who is subsequently named prime minister is an unprecedented situation in a Western democracy, and one that would have been impossible if Italy had had antitrust legislation along United States lines, note opposition members.

Perhaps 90 percent of the Italians get their information from television - television that is now directly or indirectly under Berlusconi's control, says Claudio Dematte, the former president of the state-owned RAI television's administrative council.

``It's incredible.... How can you have a democratic system of this kind?'' asks Mr. Dematte, who quit the RAI under pressure from the Berlusconi government and who teaches economics at Milan's Bocconi University. ``These are very serious issues. One should not be blind.''

The three experts recommend that Berlusconi sell Fininvest - a solution that he has previously rejected - or that he name an autonomous fiduciary who will run the company and in turn be subject to oversight authorities named by Parliament. Berlusconi resigned from his administrative role in Fininvest before becoming prime minister, although he remains its owner.

The center and left opposition parties, together with the Northern League, a partner in Berlusconi's coalition government, say the plan is clearly inadequate, although some left-wing critics said that the proposal was a step forward, since the three experts at least acknowledge that a conflict of interest exists.

``To remove the conflict of interest, he has to give up the property. There's no other way,'' says Domenico D'Amati, a lawyer and a professor of mass communications at the University of Rome. ``He can't have his cake and eat it too.''

Who will buy?

The problem, apart from Berlusconi's reluctance to do this, is who could afford to buy the various interests.

Berlusconi's debt-ridden Fininvest includes three national television networks, television and movie production companies, advertising agencies, sports teams, supermarkets, travel agencies, financial-management companies and pension-fund insurers, book publishers, the leading weekly newsmagazine Panorama, and numerous other magazines.

Berlusconi's concentration of media power is the paramount issue for the opposition.

Mario Segni, a deputy who leads a group of former Christian Democrats and who championed a referendum that reformed the electoral system last year, has gathered enough signatures to hold an extraordinary session of the Chamber of Deputies dedicated to the media.

``It's a problem so dramatic and important that the Italians have to be informed about this,'' says Carla Mazzuca, a parliamentary deputy belonging to Mr. Segni's political party. ``We hope the Italians will open their eyes ... [and] send this prime minister home.''

A number of recent actions by Berlusconi and his government have heightened concern about the conflict of interests:

* The government issued a decree on broadcasting which, among its provisions, eliminated criminal penalties against people who do not or did not in the past openly declare their ownership of broadcast media.

This decree comes as investigating magistrates in Milan and Rome are probing whether Berlusconi owns now or owned in the past more than the 10 percent allowed him by law of the pay TV station Telepiu.

Some companies involved with Telepiu were created in countries where ownership can remain secret. If it is proved that Berlusconi controls more than 10 percent, he could lose his three national networks.

A tipoff from tax police

The Telepiu investigation began after a member of the Guardia di Finanza tax police told judges he accepted a bribe from a Fininvest official, via a Guardia colleague, allegedly paid to stop inquiries into Telepis ownership.

Berlusconi sharply attacked the judges after Milan chief prosecutor Francesco Saverio Borrelli told the Corriere della Sera newspaper that the Telepiu probe could reach ``very high financial and political levels.''

Berlusconi's Cabinet sent a letter of complaint about the Borrelli interview to President Oscar Luigi Scalfaro.

And the prime minister called together the foreign press corps on Oct. 11 to deny rumors emanating from the London Stock Exchange that he was about to be officially notified that he was under judicial investigation - or even about to be arrested, which is impossible, since he is protected from arrest as a parliamentary deputy.

* In the proposed 1995 budget, the government increased the fee paid by the RAI's three networks for use of the airwaves fourfold, a financially devastating hike, while Fininvest's payment remained unchanged. The fee returned to normal after protests. The government described the incident as a ``gaffe.''

* The political opposition says that Berlusconi has consolidated a virtual monopoly on Italy's national TV networks and that he now has, in effect, six TV stations.

Marco Taradash, who had participated in anti-RAI demonstrations, was named president of the Parliament's RAI Oversight Commission under pressure from the Berlusconi Cabinet ``because Berlusconi was not willing to lose this presidency,'' La Stampa newspaper reported at the time.

The parliamentary speakers subsequently appointed a new RAI administrative council, whose president is a friend of Berlusconi's. The council, in turn, appointed new senior management of the TV networks and the news programs, several of whom had worked for Berlusconi's Fininvest.

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