The 77-year-old billionaire' s comments came after Friday's defection of a group led by Interior Minister Angelino Alfano, former secretary of his People of Freedom party, which defied Berlusconi and formed a group that has pledged to remain in Letta's coalition government.
Speaking at a congress to rebrand People of Freedom (PDL) as Forza Italia, the name of his original political movement, Berlusconi said his impending expulsion from parliament, with the support of Letta's centre-left Democratic Party (PD), meant the left-right coalition created in the wake of February's deadlocked election could not continue.
"It's very difficult to think you can remain allies in parliament and above all seated at the same table in cabinet with someone who wants to kill your leader politically," Berlusconi said.
Despite calls of "Traitors!" from some in the crowd, Berlusconi maintained a conciliatory tone towards Alfano and his group, saying the break had "caused him a lot of pain" and it was unclear what direct effect the announcement would have on the stability of Letta's government.
Alfano's group, which includes 30 senators and 27 lower house deputies, should ensure enough support in parliament for Letta, who survived a confidence vote last month with the help of the PDL rebels, as Berlusconi himself acknowledged.
"At this moment, after the decision taken by 23 of our senators on October 2, we were not capable and we are not capable of bringing down the government," Berlusconi said.
He said the break with Alfano and the other rebels was down to personal differences rather than deep policy disagreements and he considered the group as potential allies in future.
After weeks of tension in the centre-right between those pressing for a break with Letta and those determined to support the government, the split underlines the instability threatening Italy as it grapples with its worst postwar recession.
Berlusconi's political future has been in the balance since he was convicted of tax fraud in August, opening the way for his expected expulsion from parliament. The Senate is due to vote on November 27 to confirm the step which the PD says it will support.
Alfano said he had been forced to take the "painful and bitter" step of breaking with Berlusconi because PDL hardliners were pushing for an early election, which he said was unjustifiable given the pain inflicted on many Italian families in the slump.
"We can't say we'll overthrow the government and we'll have solved all our problems," he said. He said all five centre-right ministers would remain in office and there was no threat to the stability of the government which would press ahead with reforms to the economy and the unwieldy electoral system, widely seen as a source of political instability.
"We are proposing a pact with Italy. Let's see in 12 months whether the government has reached its objectives," he said.
Reflecting the strain after weeks of tension, a tired-looking Berlusconi was assisted by his doctor at one point after showing signs of exhaustion on stage, but continued his address to about 600 delegates in a conference centre in Rome.
During his 90-minute address, Berlusconi criticised the justice system and Letta's budget measures, and took a swipe at German Chancellor Angela Merkel, calling her support for austerity reforms "senseless".
He also announced plans to set up "Forza Silvio!" clubs which he said would build support at local level around Italy.
He appeared shaken up emotionally and was accompanied from the stage at the end of his speech by his doctor.
Both he and Alfano were careful to play down any enmity, stressing their mutual respect. Alfano said he would vote against Berlusconi's expulsion from parliament.
"The relationship I have always had with Silvio Berlusconi is one of very great closeness," Alfano, 43, said, adding he hoped the "ties of affection" would remain.