UPDATE 1-Italy parties still far from deal -Berlusconi ally

* Elections left Italy in political deadlock

* Pressures mount due to bank crisis in Cyprus

(Adds background, details)

ROME, March 26 (Reuters) - Formation of a new Italian government is still a long way off and unless political differences can be overcome, the country may be headed for fresh elections, a senior official of Silvio Berlusconi's centre-right party said on Tuesday.

Last month's elections created a political deadlock, but pressure to form a government to address Italy's heavy debt burden and sluggish economy increased this week, when a difficult bailout of Cyprus rattled markets and stirred concerns about the return of crisis to the euro zone periphery.

"What I can tell you is that our positions are still very distant from each other, and if they remain distant in the next 48 hours we will affirm that the only way is to go back to vote," People of Freedom (PDL) party secretary Angelino Alfano told reporters after talks with centre-left leader Pier Luigi Bersani.

Bersani, whose alliance won the largest share of the vote in February but fell short of a parliamentary majority, is meeting officials from rival parties to try to muster support to form a government.

The leader of the Democratic Party, a longtime rival of the PDL, Bersani has so far rebuffed approaches by the centre-right to form a coalition. He is due to finish talks with parties on Wednesday and is likely to present his results to the Italian president on Thursday.

Speaking beside Alfano, Roberto Maroni, the leader of the Northern League party that is in alliance with the PDL, said he would not accept another technocrat government like the outgoing administration led by economist Mario Monti.

This has been considered as an option if Bersani fails to gather enough support.

(Reporting by Naomi O'Leary; Editing by Michael Roddy)

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Keywords: ITALY VOTE/