Italy's Constitutional Court ruled today that a recent law which gave Prime Minister Silvio Berlusconi immunity from prosecution was illegitimate and had to be revoked, a court statement said.
The decision represented a severe setback for Mr Berlusconi and means that a corruption trial in Milan, where he is accused of bribery and which was frozen last June when parliament approved the law, will now have to resume.
Italy's top court ruled that the controversial legislation ran counter to the principle enshrined in the Italian constitution that everyone should be equal before the law.
The hotly-contested legislation awarded Italy's top five officials, including the president and prime minister, legal immunity during their term in office.
Critics accused the government of drawing up the bill to prevent a potentially damaging verdict falling during Italy's presidency of the European Union, which ended in December.
Mr Berlusconi's allies say the prime minister is facing a witch-hunt by politically-motivated magistrates and say the immunity law was similar to legislation in other EU states.
While the case against Mr Berlusconi was frozen in June, the trial of his co-defendants continued.
It culminated in a verdict in November with judges rejecting the central accusation that one of the prime minister's companies had bribed judges to win a favourable ruling in a 1980s corporate takeover.
However, they found that one of Mr Berlusconi's former lawyers, his close friend Mr Cesare Previti, had handed over cash to a powerful Rome judge to keep him on friendly terms with the firm. Mr Previti was sentenced to five years in jail.
He is appealing against the verdict.
It was not immediately clear when Mr Berlusconi's trial might resume. The panel of judges that heard the original trial for more than three years have since struck themselves off the case which means new judges will now have to pick up the reins.