"After dinner we went into a hall in the basement where the bunga bunga was held," Karima El Mahroug - aka "Ruby the Heart Stealer" - was quoted as saying to investigators.
"All the girls were naked during the bunga bunga and I had the feeling that they were competing with each other to make Berlusconi notice them by performing more and more daring sexual acts," she went on.
Mahroug is the woman prosecutors say Berlusconi paid to have sex with at his luxury villa outside Milan when she was just 17.
The Italian leader is further accused of abusing his power by later springing her from police custody by telling police she was former Egyptian president Hosni Mubarak's niece.
Prime Minister Silvio Berlusconi has launched a new attempt to reform Italy's judicial system, days after being charged with having sex with an under-age prostitute.
The proposals include a curb on the use of wiretaps and the re-instatement of full parliamentary immunity.
Mr Berlusconi says the reforms, given initial cabinet approval on Friday, will make the system fairer and faster.
Critics say the measures are intended to shield him from trials.
The prime minister has been trying to reform Italy's judicial system for years.
"This is a reform based on principles (underlying) civilised life," he is reported as telling cabinet ministers.
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