Dann,
Here is a link to the
Italian Consulate General in London with address and phone number.
Before you phone them, as Ricardo has said, you need to establish if your gradfather ever did renounce his Italian citizenship, and if he did whether he did it before or after you father was born.
From the dates given and your name, I presume you are a male younger than 26? If so, there may be an issue with military service. I think that it will become optional after 1 Jan 2007, or if you were born after 1 Jan 1986. The consulate will be able to give a definitive up to date answer, don't take my word for it.
The dates I just gave came from
this website which outlines a few of the benefits and obligations of having Italian citizenship. Remember that as an E.U. citizen, you have most of these benefits anyway.
Perhaps an interesting thread for discussion might be whether people should rather than could claim Italian citizenship.