* Northern League, Tremonti alliance a blow for Berlusconi
* League says will consider backing Tremonti as PM candidate
By Sara Rossi
MILAN, Dec 5 (Reuters) - Italy's pro-devolution Northern League and a new political movement led by former Finance Minister Giulio Tremonti said on Wednesday that they had joined forces to fight a national election expected in March.
The alliance cuts the chances of former Prime Minister Silvio Berlusconi's centre-right People of Liberty party (PDL) returning to power. Tremonti's views on decentralising tax and spending had guaranteed the Northern League support that helped Berlusconi win national elections in 2001 and 2008.
Tremonti said when he launched his new formation that it would aim to regulate financial markets more strictly and save Italy from losing sovereignty and being "colonised".
His Work and Freedom party (LLL) is seldom even cited in opinion polls but his respectable public image may be an effective counterweight to the League's often extreme right-wing positions on issues such as immigration.
Tremonti served four stints as a minister under Berlusconi between 1994 and 2011 and is a fierce critic of technocrat Prime Minister Mario Monti. After many clashes with Berlusconi, he left the PDL in September to form the LLL.
"With the League we share a great lack of confidence in the Monti government," Tremonti told a joint news conference with Northern League leader Roberto Maroni, an interior minister under Berlusconi.
Maroni said the League would consider backing Tremonti as its candidate for prime minister at the election rather than field a candidate of its own.
The League's president and founder Umberto Bossi said on Tuesday that he saw little chance of the party backing Berlusconi again.
Berlusconi has repeatedly changed his mind about whether to run at the election and the PDL has seen its support slide to about 15 percent, according to recent polls, compared with 34 percent for the centre-left Democrat party which now looks most likely to win the election.
The League's popularity has been hit by a spate of graft scandals this year but would still win some 6 percent of the national vote, most polls show, with a much stronger presence in its northern strongholds in the Lombardy and Veneto regions.
Tremonti was widely credited for keeping Italy's public finances under control during the Berlusconi government until government bond yields suddenly surged in the summer of 2011 as the euro zone debt crisis escalated.