ROME, Jan 11 (Reuters) - "Drastic action" is needed to relaunch the former Ilva steel plant after ArcelorMittal , which owns a controlling stake in the factory, rejected a government plan to keep it afloat, Italy's industry minister said on Thursday.

ArcelorMittal, the world's second-largest steelmaker, took control of Acciaierie d'Italia (ADI) formerly known as Ilva in 2018. It currently owns 62% of ADI, while state-owned investment agency Invitalia has the remaining 38%.

"We intend to reverse course by changing crew and outlining a national steel plan," minister Adolfo Urso told the Senate.

"Nothing that was planned has been realised. None of the commitments made have been fulfilled with regard to employment levels and industrial revitalisation," he added.

The government this week proposed that Invitalia inject 320 million euros ($351 million) into ADI and then raise its stake to 66%, as part of a broader plan to strengthen the company's capital.

ArcelorMittal, however, refused to offer guarantees that it would provide further investments even as a minority shareholder, sinking the proposal.

A source close to ArcelorMittal said the group was ready to back the government's plan provided it would continue to have similar governance powers to Invitalia.

But Urso said on Thursday that such an option was not acceptable for the government, also in light of European state aid constraints.

The case risks ending in court with both the government and ArcelorMittal accusing each other of failing to respect their commitments. Urso reiterated Invitalia had a mandate to explore "any available legal option".

Among the likely short-term solutions the government is considering is to place the plant under special administration, appointing one or more commissioners to run it, to avoid ADI being shut down, a separate source briefed on the matter said.

Ilva directly employs 8,200 people in the southern city of Taranto and unions are urging the government to safeguard jobs.

A meeting between workers representatives and ministers on the issue is scheduled to take place at 1800 GMT.

($1 = 0.9123 euros) (Reporting by Giuseppe Fonte and Angelo Amante Editing by Mark Potter)