By Phil Stewart

MILAN (Reuters) - An Italian judge could decide on Wednesday to make Silvio Berlusconi the first head of a government to testify in criminal proceedings over secret CIA transfers of terrorism suspects.

Judge Oscar Magi is expected to announce his decision on whether to call Berlusconi and other politicians when he resumes a trial at 4 a.m. EDT against 26 Americans and seven Italians accused of carrying out a transfer or "rendition" in 2003.

Prosecutors say a CIA-led team kidnapped a Muslim cleric off the streets of Milan and secretly flew him to Egypt.

There, the terrorism suspect, Hassan Mustafa Osama Nasr, says he was tortured under questioning and held for years without charge before being released in 2007.

"I was tortured for 14 and a half months ... I suffer now from heart and kidney problems. I have psychological problems. My family is scattered," Nasr, also known as Abu Omar, told Reuters at his apartment in the Egyptian city of Alexandria.

Berlusconi, who began his third term as premier last week, was prime minister when Nasr disappeared and has defended the Italian spy agency against accusations of wrongdoing.

A strong ally of U.S. President George W. Bush, Berlusconi denied knowledge of any kidnapping plan. He has also opposed the trial, arguing it could hurt Italy's reputation in the global intelligence community.

"This is a trial that shouldn't happen," Berlusconi said in 2007, when the agents were indicted.

"The risk is that Italian secret agents won't ever be able to collaborate with other intelligence agencies again."

Italy's former spy chief, General Nicolo Pollari, wants Berlusconi and other past officials -- including former prime minister Romano Prodi -- to testify about classified documents he says prove he had nothing to do with a rendition.

"Berlusconi always defended Pollari in public because he knows about these documents, classified as state secrets," Pollari's lawyer Titta Madia told Reuters, adding his client believed 88 such documents exist.

"Berlusconi is aware that these documents show that General Pollari expressed his opposition regarding illegal actions of this kind, even to the point of threatening to resign."

Public prosecutors did not oppose Pollari's request for Berlusconi and Prodi to testify, a fact that lawyers in the case say could give the judge added reason to call upon them.

Among those indicted on kidnapping charges are Jeff Castelli, the former CIA chief in Rome, and former CIA Milan station chief Robert Lady.

The Americans -- almost all of them believed to be CIA agents -- are being tried in absentia and a U.S. official has made clear Washington will not turn them over to Italian courts.

Berlusconi's previous administration refused to pass on prosecutors' extradition requests to Washington.

Nasr said he believes that Berlusconi must have known about the rendition, and detailed plans to sue Italy for 20 million euros ($31 million) in damages.

"Sure Berlusconi knew about the case because it had to do with the sovereignty of Italy," he said.

Nasr's wife is scheduled to testify in court on Wednesday. It was Nasr's description of his abduction in a wiretapped phone call to her in 2004 that tipped off investigators about a possible rendition.

Time permitting, lead investigator Bruno Megale is also due to testify on Wednesday about evidence that police say linked U.S. and Italian spies to Nasr's disappearance.

(Additional reporting by Alaa Shahine in Alexandria, Editing by Matthew Jones)