The European Central Bank is demanding that Italian Prime Minister Silvio Berlusconi commit to fast-track specific welfare reforms and a constitutional amendment enshrining a fiscal rule before it will buy Italian bonds, sources close to the matter said on Friday.

The sources, speaking on condition of anonymity because of the sensitivity of the issue, said the ECB had agreed in principle on Thursday to buy Italian and Spanish bonds if key structural reforms were brought forward.

If Italy announces something very, very soon, this will help overcome opposition by these ... figures in the governing council and facilitate ECB intervention, which is the only thing that can stabilize the market now. I don't see how we can survive another week like this one, one source involved in the talks said.

Berlusconi's office said he and Economy Minister Giulio Tremonti will hold a news conference at 1700 GMT, although it was not clear whether he will make an announcement along those lines.

A senior euro zone official also said the ECB wanted to see extra effort from Spain and Italy before stepping in.

In principle it is right to say that the ECB could start buying Spanish and Italian bonds if they made an extra effort with fiscal and structural reforms, the official said.

Another source said he was not aware of any specific demand on Spain, but Madrid was also expected to commit to speeding up structural reforms.

Top European Union leaders were applying concerted pressure on Berlusconi to make an announcement by the end of the weekend so that the ECB could intervene in bond markets early next week, the sources said.

The ECB has already signaled their will to act. People in the market say the ECB has started inquiring about Italian bond prices, but it hasn't bought any, one source said.

He said the ECB did not negotiate directly with governments, but the European Commission and European Council President Herman Van Rompuy were talking to the Italian and Spanish governments, and the French and German leaders were applying vital political pressure.

An Italian government source said earlier that Berlusconi spoke by telephone on Friday to his Spanish counterpart Jose Luis Zapatero and Van Rompuy to discuss market turmoil.

Four of the 23-strong ECB Governing Council opposed the reviving of its bond-buying programme which has so far only bought Portuguese and Irish paper over the past two days.

However, one source briefed on the ECB discussion said that German Bundesbank chief Jens Weidmann and ECB chief economist Juergen Stark had voted against the decision mainly because they wanted more pressure on Italy to carry out serious reforms.

It was about tougher conditionality, not against the principle, he said.

The source said the German government had made known privately to European partners that it supported a resumption of the ECB's bond-buying.

Italian Economy Minister Giulio Tremonti vented his frustration on Thursday at the ECB's approach, saying that when he talked to Asian investors, they had told him: If your central bank doesn't buy your bonds, why should we buy them?

The second source said EU officials were frustrated because Berlusconi had repeatedly pledged to introduce more decisive reforms to liberalise the Italian economy, but then he goes to parliament and gives a populist speech saying everything is rosy.

EU Economic and Monetary Affairs Commissioner Olli Rehn said on Friday Italy should accelerate the approval and implementation of the welfare reform now in Italian parliament and urged the government to work closely with social partners to open up closed professions and do more labor market reforms.

(Reporting by Paul Taylor and Jan Strupczewski, editing by Mike Peacock)