* Berlusconi begins 1-year community service for tax fraud
* Will assist Alzheimer's patients once a week
* Can still campaign for votes, says wields power over govt (Adds details, background)
By Silvia Aloisi and Ilaria Polleschi
CESANO BOSCONE, Italy, May 9 Silvio Berlusconi smiled and waved as he left an old people's home on Friday after his first stint of community service, a symbolic punishment for tax fraud that still allows him to wield huge influence over Italian politics.
The four-time prime minister, himself 77 years old, had initially received a four-year jail sentence, but that was commuted to one year's community service and he will spend at least four hours a week at a centre for Alzheimer's patients in a small town on the edge of Milan.
In a striking fall from grace, the media tycoon arrived in the morning in a sedan with darkened windows, wearing his trademark dark suit.
Ignoring around 200 Italian and foreign journalists, Berlusconi left bodyguards and aides outside as he entered the Sacred Family institute, a sprawling structure caring for the elderly and mentally ill.
As he left after four hours, he waived and smiled briefly at the media without making a comment, in line with rules that prevent him from speaking to reporters while on the premises.
A lone trade union protester in a clown's hat shouted that Berlusconi should go to prison in Milan's nearby San Vittore jail before being escorted away by security.
Following his definitive tax fraud conviction last year in a case revolving around his Mediaset broadcaster, Berlusconi was stripped of his seat in the Italian Senate and barred from holding public office for two years.
But he remains the most influential politician on Italy's centre right, as leader of the Forza Italia party he created, and he played a key role in negotiations with Prime Minister Matteo Renzi this year on reforming the electoral law.
The community service and travel restrictions that limit his movements to the Lombardy region around Milan and Rome still allow him to campaign for European Parliament elections this month.
Opinion polls suggest Forza Italia could command just short of 20 percent of the vote, making it Italy's third largest party after the centre-left Democratic Party led by Renzi and the anti-establishment 5-Star Movement.
Adding to Berlusconi's and Forza Italia's image problems, his former interior and industry minister Claudio Scajola was arrested on Thursday on suspicion of helping a former party colleague convicted of mafia association to flee justice.
Yet shortly after finishing his first day at the home in Cesano Boscone, Berlusconi showed he still intends to wield political clout.
"We are the ones who could blackmail Renzi by not giving him our votes for the reforms that he wants to push through," he told a small television network.
At Cesano Boscone, reactions to his arrival were muted.
"I think all this media attention is excessive, given that he's not coming here because he wants to help those suffering from Alzheimer's disease, he's here because he was forced to come," said a man who works as a volunteer at the centre and only gave his name as Mario.
Sabatina Carlone, a Berlusconi supporter who came with her husband and 18-month-old nephew in a show of support, said: "We came because we are in love with him as a leader. This is not justice, it's a mockery. The president (of Italy, Giorgio Napolitano) should have pardoned him."
Berlusconi has promised "surprises" during his service and told a radio station on Thursday he had been studying the latest treatments for Alzheimer's disease to help patients "do more".
The director of the centre, Paolo Pigni, said last month Berlusconi would at first go through a period of observation of the needs of Alzheimer's patients before assisting them more actively, helping them eat or taking them for a stroll.
"He won't stay in an office. He won't do something enjoyable or relaxing, he will do activities with suffering people who are a challenge for all those having contact with these patients." (Additional reporting by Roberto Rossi; Writing by Silvia Aloisi; Editing by Gavin Jones and Robin Pomeroy)