* Lower house set to pass law, a test of Renzi reform drive
* Law aims to foster stable governments
* Renzi deal with Berlusconi key to cross-party support (Adds final vote postponed to Wednesday)
By Roberto Landucci
ROME, March 11 (Reuters) - Italian lawmakers edged closer on Tuesday to approving a new electoral law seen as a test of new Prime Minister Matteo Renzi's ability to enact broad structural reforms needed to end government instability in Italy.
Overhauling the complicated voting system blamed for leaving Italy with a deadlocked parliament has been a top priority for Renzi since he became leader of the main centre-left Democratic Party (PD) last year.
The new law, designed after an agreement between Renzi and centre-right leader Silvio Berlusconi, is intended to produce a clear winner able to govern without the kind of unwieldy cross-party coalition left by last year's inconclusive election.
Renzi had been pushing hard to get the bill through the Chamber of Deputies lower house before he unveils a package of tax and job measures on Wednesday.
But it has caused widespread unease in the PD, where many are very unhappy at the accord with their arch-enemy Berlusconi and irritated with the bulldozing style of the 39-year-old premier, who has insisted the legislation be passed quickly to avoid the risk of it being picked apart in parliament.
The Chamber of Deputies approved voting thresholds designed to encourage strong coalitions and shut out an array of destabilising tiny parties from parliament.
But it voted to make the reform inapplicable to the Senate, and also rejected a motion to replace the so-called "blocked lists" of candidates picked by party bosses with a preferential voting system that would have allowed voters to vote directly for individual candidates of their choice.
The lower house delayed a final vote on the bill from Tuesday evening to Wednesday. The bill would then go to the Senate, where it may undergo further amendments.
Although all sides agree on the need for a revamp of the electoral law, agreement has been held up by wrangling over various details and Renzi struggled to placate angry female members of his own party after parliament rejected amendments designed to ensure gender equality on candidate lists.
SENATE ROLE
Redesigning the electoral law has long been seen as a necessary step towards stabilising a fragmented political system that virtually guarantees governments incapable of surviving a full term in Italy, the euro zone's third largest economy.
But the law which has come out of the lower house has disappointed many in the PD and given ammunition to party critics who have always been sceptical of Renzi.
Rosy Bindi, a senior PD lawmaker who chairs parliament's anti-mafia committee, said she would not vote on the law after members of her own party voted against the amendment on gender equality. "The responsibility is all the PD's because it sacrificed its loyalty to the constitution and its own values for an accord with Berlusconi," she told La Repubblica daily.
The law, which will apply only to the lower house, will set a minimum entry threshold of 4.5 percent for a party to enter parliament as part of a coalition, or 8 percent for parties that are not part of a coalition.
It will assign a winner's premium that guarantees a majority of 15 percent to the largest coalition as long as it gets a minimum of 37 percent of the vote.
If no coalition gets to 37 percent, a run-off round between the two biggest groups will decide the winner.
But the fact that the current proposal will not affect the Senate, which has exactly equal powers with the Chamber of Deputies, leaves a continuing threat to stable government as it has proved exceptionally difficult for one coalition to win a majority in both houses.
Renzi wants to reduce the Senate to a powerless regional assembly, concentrating clout in the Chamber of Deputies but doing so will require a constitutional amendment and could take a year or more to pass. (Writing by James Mackenzie; Editing by Mark Heinrich)
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