UPDATE 1-Prosecutor, defence urge community service for Berlusconi
* Court to decide sentence for former PM in 5-15 days
* Berlusconi wants freedom to continue political activity
* Right-wing leader convicted of tax fraud last year (Recasts after prosecutor's request, adds detail, background)
MILAN, April 10 (Reuters) - Both the prosecution and defence have asked a Milan court to order former Prime Minister Silvio Berlusconi to serve a one-year sentence for tax fraud doing community service, judicial sources said on Thursday.
The judge told reporters after the first day of hearings that the court would decide in 5-15 days what kind of punishment the centre-right leader will receive.
The ruling will be crucial in determining what role the 77-year-old - still the most influential political figure on Italy's right - can continue to play in public life over the coming year.
Berlusconi could in theory be sent to prison or put under house arrest, but as both the prosecutor and his lawyers favour community service, this appears the most likely outcome.
The media tycoon's lawyers told to the court their client could "motivate" disabled people at a new home to be opened in the countryside outside Milan. An Italian government agency earlier asked for Berlusconi to work in a centre for the elderly.
Berlusconi's most immediate concern is to be able to campaign at the head of his Forza Italia party for European Parliament elections next month. The court could either facilitate this or make it virtually impossible by setting strict limits on his freedom of movement and action.
For example he could be prevented from holding political rallies or giving media interviews, or be allowed to do both.
The four-time prime minister has dominated Italian politics since the mid-1990s, but was expelled from the Senate last November after being convicted of masterminding a complex system of tax fraud at his Mediaset television network.
His four-year jail sentence was commuted to one year under a law aimed at reducing prison overcrowding. Under Italy's snail-paced justice system, it is only this month, more than 10 years after the crime and eight months after the verdict, that it will be decided when and how he will serve his sentence.
After completing the first six months, Berlusconi's sentence will automatically be reduced to 10 and a half months. If his behaviour is considered impeccable it may be reduced further, to nine months.
Berlusconi continues to protest his innocence and says he has been pursued by a left-wing judiciary.
Berlusconi's centre-right has suffered an internal split and lost support since he almost won last year's national election, but Forza Italia is still Italy's second or third largest party with about 20 percent of the vote, according to opinion polls.
On Thursday the party's lower house leader, Renato Brunetta, compared Berlusconi to Burmese Nobel peace prize winner Aung San Suu Kyi, who spent years under house arrest and became one of the world's most prominent political prisoners.
"Berlusconi is a symbol and you can't silence symbols, you can't muzzle them and you can't block them," Brunetta said. (additional reporting by Manuela D'Alessandro; Writing by Gavin Jones; Editing by Mark Heinrich)
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