The woman at the centre of a scandal involving Prime Minister Silvio Berlusconi has added a new twist to a saga that has riveted Italy, saying he knew she was a prostitute when she spent the night with him.

"Certainly he knew that I was an escort," Patrizia D'Addario said on a television programme aired nationally by the state broadcaster RAI late on Thursday night. RAI said some 7.3 million people watched the show.

Mr Berlusconi, 73, has not denied spending the night with the 42-year-old, but she directly contradicted his previous statements that he did not know that she or any of the other women who attended his parties were expensive prostitutes.

"Even the other girls knew that I was to stay there that night. Everyone knew that I was an escort," she said.

Ms D'Addario described the atmosphere at the parties as "like a harem".

The scandal surrounding Mr Berlusconi's private life revolves around a court case in southern Bari concerning the activities of businessman Gianpaolo Tarantini, who is under investigation for corruption in the local health system.

Mr Tarantini, who is under house arrest after being charged with drug dealing, acknowledges that he helped procure female guests for dinners and parties at Mr Berlusconi's home but says Mr Berlusconi did not know they were prostitutes.

"I introduced them as my friends and kept quiet that I was sometimes paying them," Mr Tarantini has been quoted as saying in Italian newspapers.

Ms D'Addario taped explicit conversations with Mr Berlusconi on her mobile phone and went public when, she says, promises such as business favours and even a European Parliament seat went unfulfilled.

She said the first time she went to a party at the premier's Rome residence, she had declined to stay the night and was paid €1,000 instead of the €2,000 Mr Tarantini had promised. The second time, US election night last November 4, she stayed.

Another escort, Barbara Montereale, said that "all the girls knew" that if they agreed to spend the night at the Prime Minister's residence, Mr Tarantini would give them extra money.

Mr Tarantini's lawyers said he had never introduced Ms D'Addario to Mr Berlusconi "as an escort" and that there was never any "prior agreement regarding previously commissioned sexual services".

Mr Berlusconi is suing newspapers in Italy and elsewhere in Europe for libel in their coverage of the scandals. Italian journalists are demonstrating nationwide today against what they describe as government attempts to muzzle the media.

Berlusconi spokesman Paolo Bonaiuti said the show's assertions were built around "gossip and peeping through a keyhole". The show ended just before midnight but dominated the front pages of nearly all Italian newspapers yesterday.

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