ROME - Around 10,000 Italians, most waving Israeli flags, demonstrated peacefully outside Iran's embassy in Rome late Thursday to protest President Mahmoud Ahmadinejad's recent call for Israel to be "wiped off the map".

Dozens of parliamentary deputies and senators from government and opposition parties participated in the torchlight protest along with Jewish groups, but Italy's foreign and defence ministers belatedly pulled out over fears their presence would further escalate a diplomatic rift with Tehran.

Foreign Minister Gianfranco Fini said in a televised statement he was withdrawing because his presence could have provoked "damaging consequences" for Italy and for Italians.

Defence Minister Antonio Martino announced his withdrawal with "extreme regret" shortly afterwards. He said his decision was rooted in the desire "to not fuel other, uncontrollable, demonstrations of hatred and intolerance of the kind already expressed towards Israel."

Martino said he had consulted with Prime Minister Silvio Berlusconi's office and with the foreign ministry before deciding to withdraw.

Their concern was not entirely shared by Reform Minister Roberto Calderoli of the Northern League, a small but vociferous component of Berlusconi's governing coalition -- the only minister to attend the protest.

"I understand why he's not here. It would have been an official gesture from the state," Calderoli said, referring to Fini. "Having said that, I'm here and I'm staying."

Police estimated the crowd at 10,000. Earlier, around 2,000 people demonstrated outside the Iranian consulate in the northern city of Milan, while a few hundred people turned out for a similar protest in Turin.

Iranian students held a peaceful counter-demonstration outside Italy's embassy in Tehran earlier Thursday.

Fini's withdrawal was particularly dramatic because he had confirmed his participation only the day before, after returning from a visit to Israel where he said Iran should be taken before the UN Security Council over its suspected nuclear weapons drive.

Iran accused him of spouting Israeli propaganda, and called in Italy's ambassador to protest the decision to hold a demonstration outside its embassy.

The leaders of Italy's biggest opposition parties, Piero Fassino and Francesco Rutelli, as well as Rome's left-wing mayor Walter Veltroni, were among the crowd -- but as with Berlusconi, opposition leader Romano Prodi stayed away.

Police blocked nearby roads and kept a close watch on the demonstrators, who gathered before the embassy gate under a sea of Israeli flags. A small minority waved the Italian tricolour and the rainbow-coloured peace flag.

The pro-Israel demonstration was launched at the weekend by the right-wing daily Il Foglio, whose editor Giuliano Ferrara is a former spokesman for Prime Minister Silvio Berlusconi.

Italy is one of Iran's principal trading partners in the European Union. Iran is Italy's fourth-biggest supplier of oil.

An unidentified Iranian official was earlier Thursday quoted by business daily Il Sole 24 Ore as saying Tehran could consider possible economic reprisals against Italy.

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