By Silvia Aloisi

ROME, March 22 (Reuters) - Prime Minister Romano Prodi is facing criticism at home and abroad after a deal with the Taliban to free an Italian reporter in Afghanistan.

The United States and Britain have denounced the deal, in which five Taliban were exchange for the journalist this week, and on Thursday Italy's opposition threatened to withdraw its support for Italian peacekeepers in Afghanistan.

That support is crucial for Prodi ahead of a March 27 vote on the mission in the Senate, where he has a tiny majority. He had to resign briefly last month after losing a Senate vote on foreign policy, including the presence of Italians alongside U.S., British and other nations' troops Afghanistan.

"By now we are regarded as unreliable by our allies," said former prime minister Silvio Berlusconi, a staunch U.S. ally. "I was greeted very warmly when I visited the United States, (President George W.) Bush trusted me. It's not the same now".

Berlusconi's own government was accused by critics of paying ransoms to free Italian hostages in Iraq. But Gianfranco Fini, foreign minister under Berlusconi, said no foreign ally had blamed Rome in past hostage crises.

"Italy has lost all international credibility," Fini said, adding that Italian soldiers in Afghanistan were ill-equipped to deal with the recent escalation of violence.

"The situation on the ground in Afghanistan has completely changed and our vote on the refinancing of the Italian mission should not be taken for granted any longer," he said.

A senior U.S. administration official said on Wednesday Washington had formally complained to Rome about the prisoner swap to free journalist Daniele Mastrogiacomo, which it saw as a "concession to terrorists" that would put NATO troops in danger.

Britain joined in the criticism, with a Foreign Office spokeswoman saying London was concerned the deal "sent the wrong message to prospective hostage-takers".

Rome played down the rift and Foreign Minister Massimo D'Alema was due to phone his U.S. counterpart Condoleezza Rice on Thursday to clear the air, sources at his ministry said.

The hostage deal raised eyebrows even among Prodi's allies.

"The American reaction is understandable," Trade Minister Emma Bonino told La Repubblica newspaper in an interview.

"The release of five Taliban whom NATO troops now risk having to battle as armed enemies is a problem and we have to assess the consequences. To get an idea, one should look at the Islamic Web sites hailing the victory of the Taliban," she said.

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