ROME (Reuters) - Italys 5-Star Movement, once a prototype for successful populist and anti-establishment parties around Europe, is at a crossroads. Does it fully embrace the political mainstream, or revert to being an outsider?

FILE PHOTO: Italy's Prime Minister Mario Draghi drinks a beverage during a debate at the Senate ahead of a confidence vote for the government, in Rome, Italy, February 17, 2021. REUTERS/Yara Nardi/Pool/File Photo

With support ebbing, its fate could shape Italian politics for years to come, and the battle lines over its future have been drawn.

When the head of state asked former European Central Bank head Mario Draghi on Feb. 2 to try to form a government, and so end Italys political stalemate, 5-Stars leadership immediately ruled out supporting him.

But its founder, 72-year-old former comedian Beppe Grillo, had other ideas. Four days later, he rushed from his home in Genoa for a crisis meeting in Rome with about 30 of 5-Stars top lawmakers.

At the encounter in a conference room in the capitals labyrinthine Chamber of Deputies, he made clear 5-Stars initial decision should be reversed, according to a lawmaker who was present.

When we walked in Grillo was pretending to talk to someone on the telephone; it was a kind of comedy act, said the source, who declined to be named because the meeting was private. He was discussing ... why we should be part of the government.

Some 5-Star politicians and voters are deeply unhappy with the line imposed by Grillo.

At Draghis first vote of confidence in parliament on Wednesday, 23 of 5-Stars 92 senators defied the party line and refused to back him. 5-Stars caretaker leader Vito Crimi said most of them would be expelled.

If 5-Star emerges from its crisis further weakened or transformed into a mainstream progressive party, it could mark the end of the populist wave which swept Italy at the last election and which alarmed financial markets and its European partners.

Matteo Salvinis League has already shifted out of the far-right camp to get behind Draghi.

In some ways, 5-Star has followed a similar trajectory to other populist parties in southern Europe such as Syriza in Greece and Podemos in Spain.

All three achieved power, but have been absorbed into the mainstream they vowed to fight and seen their support wither.

I dont know what you should call us now. Maybe the anti-anti-establishment party?, 5-Star lawmaker Raphael Raduzzi told Reuters. We have to ask ourselves what we want to become.

Grillo gave up day-to-day involvement in 5-Stars affairs about five years ago, but when crucial decisions are to be made he is still the one who calls the shots.

Shortly before his meeting with 5-Star parliamentarians, he wrote a blog post calling for the new government to name a minister for ecological transition with full responsibility for energy policy.

Grillo had already spoken to Draghi and received an assurance this ministry would be created in return for 5-Stars backing, a source close to the 5-Star founder told Reuters.

Grillo, who communicates with the public mainly through his blog, declined to comment for this article.

Draghis spokeswoman confirmed Grillo and Draghi spoke about the governments formation.

They agreed over the importance of creating a government with a strong emphasis on ecological transition, she said.

Ecology has always been a central part of 5-Stars platform. It is one of the five policy stars from which it takes its name. Sustainable transport is another.

Italy, unlike Germany and France, has never had a successful Green party and Grillo is eyeing that gap in the hope of saving his party from gradual extinction.

Huge sums as well as high ideals are involved. The European Commission has ordered that policies to fight climate change must account for 37% of its Recovery Fund set up to help the blocs battered economies, the largest single component.

In Italys case that means 70 billion euros ($85 billion) to spend on green transition over the next six years.

Now the environment. Whatever it takes, Grillo tweeted this week under an Andy Warhol-style multicolour diptych of Draghi, in reference to the former ECB chiefs famous 2012 pledge to do whatever it takes to save the euro.

5-Star is the largest force in parliament thanks to its triumph at a 2018 election when it took 33% of the vote, double the tally of its nearest rival.

It now has less than 15%, making it Italys fourth largest party, and desperately needs a new identity.

It has four ministers in Draghis newly formed cabinet, but for many members, supporting the government of a former ECB chief is unacceptable. Doing so in a coalition with sworn enemies makes matters worse.

Founded in 2009 as a channel for protest against the perceived corruption and cronyism of Italys political and business elite, 5-Star espoused internet-based direct democracy and vowed never to form alliances with traditional parties.

In the last three years it has ruled in two coalitions, with the right and centre-left, and is now set to govern with both at once.

For me this is a step too far, said Raduzzi, a lower house deputy who opposed joining the government of technocrats and career politicians.

Raduzzi has not left the party, unlike one of its most popular figures - Alessandro Di Battista - who writes frequent articles attacking Draghi or members of his government.

Di Battista, a charismatic 42-year-old firebrand, walked out after the decision to back Draghi, but his followers expect him to return when the time is right and see him as a future leader.

The battle for 5-Stars future is likely to be fought over the opposing visions of Di Battista on the one hand and Grillo on the other.

Grillo, for now in the driving seat, wants to transform 5-Star into an environmentalist, pro-EU party allied with the centre-left Democratic Party to compete with Salvinis rightist bloc.

Di Battista wants 5-Star to avoid a structural alliance with the left and to regain its old anti-establishment spirit, with a more critical stance towards the EU and big business.

I believe this government is suicide for the 5-Star Movement and is bad for Italy, Di Battista told Reuters. He did not rule out a return to 5-Stars ranks in the future.

The risk for 5-Star, currently in the hands of the uncharismatic Crimi, is that whatever path the party takes, by the time of the next election in 2023 its decline will be irreversible.

The slump in 5-Stars support was not altogether surprising, given it is an anti-establishment party also in government. Without sufficient seats in parliament to rule alone, the movement also joined forces with either the left or right.

Unlike the leftist Syriza and Podemos, or the far-right National Rally in France and Austrias Freedom Party, 5-Star has always presented itself as an ideology-free movement with voters from the left and right alike.

Some political commentators believe its best chance of revival lies with former Prime Minister Giuseppe Conte, who has no party affiliation but is close to 5-Star.

The message Conte posted on Facebook on his last day as prime minister received more than a million likes, a record for an Italian politician. He promised to continue the path of his 16-month, left-leaning government in future.

Millions of 5-Star voters, and some of its politicians, hope he does so as their leader.

($1 = 0.8275 euros)

Writing by Gavin Jones; Editing by Mike Collett-White

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Divided over Draghi, Italy's 5-Star has an identity crisis - Reuters