Roberto Calderoli, who quit as minister over the weekend, is under investigation for contempt of religion over a T-shirt he wore showing controversial cartoons of the Prophet Mohammed.
Rome prosecutors confirmed on Monday they are assessing whether Calderoli, who unbuttoned his shirt to reveal the T- shirt on national television last week, can be charged with offending the Islamic faith.
Until recently, the offence in question carried a maximum penalty of two years in jail. But the law was recently reformed so that now the punishment is a fine of between 1,000 and 5,000 euros.
Calderoli's T-shirt was the apparent focus of violent protests in the Libyan city of Benghazi on Friday, when 11 Muslim demonstrators were killed. The Italian consulate there has been ransacked.
The minister's action, taken to underline his view that Italy and the West should be tougher in its dealings with Islam, sparked immediate outrage in the political arena and Premier Silvio Berlusconi asked him to quit.
He did so on Saturday in a move which initially sparked anger in his Northern League party, a junior partner in Berlusconi's centre-right government.
Fellow League bigwig Roberto Maroni, who is Welfare Minister, said the party might even decide to run alone at April 9 elections. But Berlusconi quickly replied that Calderoli's ouster had been agreed with Northern League chief Umberto Bossi. The waters appeared to have become calmer on Monday,
ahead of a meeting of Northern League party officials which had earlier promised to be stormy.
Calderoli said he had spoken to Bossi and Maroni and come to an agreement on the way forward. "We have decided to close the business of my resignation definitively and to restore some calm," he said.
The ex minister said he would propose that his party stick with the centre right in coming elections as long as Berlusconi's coalition agreed to insert certain priorities into its programme. One of these was the "defence of Europe's Christian roots, and a battle against any form of fundamentalism." Berlusconi's spokesman Paolo Bonaiuti later said that the points mentioned by Calderoli were acceptable to the premier's party.
While the rift in the centre right appeared to be moving towards a resolution, the opposition continued to lambast Calderoli over the affair.
"The resignation closes the Calderoli business but it doesn't end the negative consequences for the country,"
centre-left leader Romano Prodi said. "This has put Italy in an extremely difficult position with regard to the countries in the Mediterranean region," he added.
One of Italy's foreign policy goals in recent years has been to promote closer relations with countries on the
southern and eastern rim of the Mediterranean. After Calderol's resignation on Saturday, Berlusconi phoned Gaddafi to discuss the incident and express his regret.
A note from the Premier's office said the two agreed that "this serious episode must not in any way negatively affect the friendly relations between Italy and Libya."