The Italian Senate has approved wide-ranging cuts aimed at slashing the budget deficit and calming financial markets as Italy fights to avoid being dragged down by Europe's deepening debt crisis.
"If we don't have a balanced budget then public debt - a monster from our past - would devour our future and the future of our children. The country is watching us," Economy Minister Giulio Tremonti said ahead of the Senate vote on Thursday.
Italy's four-year crash austerity plan, which includes a freeze on public sector salaries and a cut in regional subsidies, has been raised to nearly 48 billion euros ($A63.7 billion) from 40 billion euros ($A53.1 billion) after investor pressure.
The budget plan is aimed at slashing Italy's budget deficit down to 0.2 per cent of gross domestic product by 2014 from 4.6 per cent last year.
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Tremonti also warned other European governments of the fallout of the crisis.
"There should be no illusions about who will be saved. Like on the Titanic, the first class passengers won't be able to save themselves," he said.
"Either we move forward or we go down."
The vote in the Senate, where the government holds a comfortable majority, was 161 votes in favour to 135 against with three abstentions.
The measures are now set to go before the lower house of parliament on Friday for expected final approval, even though the main opposition Democratic Party has said it will vote against them and has demanded new elections.
"It's a race against time," Massimo Esposti, editor-in-chief at Italian business daily Il Sole 24 Ore, said on the newspaper's website.
Italy, the eurozone's third largest economy, has one of the highest debt levels in the world and one of the lowest growth rates in Europe.
Reports of infighting between Prime Minister Silvio Berlusconi and Tremonti have further spooked investors in recent days.
Italy also on Thursday carried out a bond auction which was successful but saw the rate on its 15-year bonds rise to 5.90 per cent - the highest since the introduction of the euro, indicating investor unease at Italy's prospects.
