ROME, Jan 2 (Reuters) - Italy will campaign at the United Nations for a global ban on the death penalty, Prime Minister Romano Prodi said on Tuesday, after graphic images of Saddam Hussein's hanging shocked people around the world.

Italian politicians of all political parties expressed disgust at Saddam's execution, with even former prime minister Silvio Berlusconi calling it a "political and historic error".

Pressured by a week-long hunger strike by a 76-year-old campaigner against Saddam's execution and the death penalty in general, Prodi said Italy would push the U.N. for a "universal moratorium" on capital punishment.

Prodi said Italy, which has just taken up a temporary Security Council seat, aimed to involve the 85 U.N. countries which signed a non-binding declaration in December against the death penalty in lobbying for a ban.

The Iraqi government has hit back at Italy for its criticism of Saddam's execution, accusing it of hypocrisy, especially after World War Two dictator Benito Mussolini was killed by partisans and hanged upside down in a Milan square in 1945.

"They have no right interfering in the affairs of another country," government official, Yaseen Majeed, was quoted as saying in La Repubblica daily. "Mussolini's trial only lasted one minute."

While Italy's divided political class is united in its opposition of the death penalty -- outlawed in all European Union countries -- the mention of Mussolini reopened wounds between left and right.

Alessandra Mussolini, granddaughter of the fascist dictator and a member of the European Parliament, said her "blood ran cold" when she watched the pictures of Saddam's execution.

"My mind immediately flicked to pictures of my grandfather, who also had his face uncovered exposed to the public for ridicule."

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