The first of the plants -- which generate electricity using waste as fuel -- will be ready by year-end, he said.

Meanwhile, Berlusconi has mobilised the army to prevent emergency landfill sites in the area being picketed by angry local residents. The city has temporary arrangements to send its rubbish to other parts of Italy and Europe.

Berlusconi was due in Naples later on Friday to hold his regular cabinet meeting in the city, fulfilling a promise made in the campaign for May's election to gather his cabinet there until the Naples rubbish crisis was over.

He says that point has now been reached, since the streets of Naples and outlying districts are no longer choked by piles of stinking rubbish bags, which local residents often burned at night and which caused illnesses in the area.

"This crisis has harmed the people of Naples and the Campania region and the Italian people, as well as our tourism industry and exports," said Berlusconi. He blames the last centre-left government, but the problem stretches back about 14 years to include at least one of his previous two terms as prime minister.

"We held our first cabinet meeting in Naples 58 days ago and will hold another one there today, when I will proudly announce and show everyone that in Naples and Campania there is no more rubbish in the streets," he said.

A Reuters reporter in Naples ahead of the cabinet meeting said the city centre, at least, had been cleared of the piles of waste which have done such damage to Italy's image abroad.

Waste disposal has long been a chronic problem for Italy's third largest city, further complicated by the local "Camorra" mafia's interest in the lucrative business.

Official dumps were declared full late last year, meaning refuse was left in the streets. Attempts to open new landfill sites met stiff resistance from locals, who erected barricades to stop garbage trucks and clashed with police.

The European Union took Italy to the European Court of Justice this year for failing to resolve the garbage crisis, raising the possibility of heavy fines. (Writing by Stephen Brown; Editing by Caroline Drees)