UPDATE 1-Berlusconi faces expulsion from parliament for tax fraud
* Senate due to vote on ban over tax fraud conviction
* Berlusconi denounces "coup d'etat"
* Media tycoon can continue to lead centre-right from outside parliament
ROME, Nov 27 (Reuters) - The Italian Senate opened its debate on expelling Silvio Berlusconi on Wednesday, ahead of an evening vote that is expected to see the veteran centre-right leader stripped of his seat in parliament over a tax fraud conviction.
The vote, after months of political wrangling, will open an uncertain new phase in Italian politics, with the 77-year-old media billionaire preparing to use all his extensive resources to attack Prime Minister Enrico Letta's coalition government.
A protest by supporters planned for Wednesday afternoon will be "only the beginning", Berlusconi warned this week, saying it would be followed by a series of actions to "defend democracy", though he no longer commands enough support in parliament to bring down the government.
Berlusconi, who has dominated politics in Italy for two decades, has already pulled his party out of Letta's coalition after seven months in government, accusing leftwing opponents of mounting a "coup d'etat" to eliminate him.
Letta declared on Wednesday that his government was now "stronger and more cohesive" after a group of dissidents who split off from Berlusconi's Forza Italia party helped him win a confidence vote on the 2014 budget late on Tuesday.
He declined to comment on Berlusconi to avoid inflaming an already volatile situation.
A Senate committee has proposed declaring Berlusconi ineligible for parliament after he was convicted of masterminding a complex system of illegally inflated invoices to cut the tax bill for his Mediaset television empire.
Under a law passed with Berlusconi's support last year, politicians convicted of serious criminal offences are ineligible for parliament, but his expulsion must first be confirmed by a full vote in the Senate.
The court sentenced him to four years in jail, commuted to a year likely to be spent performing community service. He was also banned from holding public office for two years, preventing any immediate return to government.
Both Letta's centre-left Democratic Party (PD) and former comedian Beppe Grillo's anti-establishment 5-Star Movement have declared they will vote against Berlusconi, making it virtually certain that he will be expelled.
After tactical skirmishing over the day's agenda in the morning, voting was brought forward to around 5.00 p.m. (1600 GMT), with a series of motions challenging the move to expel Berlusconi expected before the main vote.
As the voting takes place, Berlusconi is expected to be addressing a rally of supporters outside his Rome residence, underlining that he will remain a troublesome opponent to the government even outside parliament.
As tension mounted ahead of the vote, Forza Italia officials denounced police who confiscated a banner reading "coup d'etat" that supporters had planned to hold up at the rally.
The party also said coaches carrying their supporters had been prevented from reaching the centre of Rome and they would be complaining to Interior Minister Angelino Alfano, who is the leader of the dissidents who abandoned Berlusconi.
Much like Grillo, who does not sit in parliament but who keeps up a steady stream of attacks in public meetings and on his widely read blog, Berlusconi is almost certain to mount a sustained campaign against the government in the run-up to the European parliamentary elections in May.
Letta said his victory in the budget vote meant his government would be able to pursue reforms more effectively.
But the political battle over Berlusconi has already hampered any serious overhaul of Italy's stagnant economy, which is stuck in a recession that has lasted more than two years, sending youth unemployment over 40 percent.
Berlusconi's lawyers dismiss as "completely unrealistic" the possibility that, once his parliamentary immunity is lifted, he may face arrest over a series of other cases, including paying for sex with a minor.
The split on the centre-right may have removed the immediate threat to Letta, who has won two confidence votes in parliament since Berlusconi's conviction, but the risk of further judicial conflict over any of the other criminal trials and investigations hanging over Berlusconi could inflame supporters further.
"Berlusconi is a victim of an unjust, anti-democratic battle," said Forza Italia deputy Annagrazia Calabria. "Nobody can take away the consensus of millions and millions of Italians, all his followers who still believe in him and who have stayed by his side."
Berlusconi joined Letta's Democratic Party in an unlikely coalition after the February election left no side able to form a government on its own.
But relations were rocky from the start and were worsened by rows over tax policy and tensions over Berlusconi's tax fraud conviction in August.