Mr Berlusconi says his government will finish its term

Prime Minister Silvio Berlusconi said he was confident of getting the programme approved by Parliament before the summer recess.

Mr Berlusconi, who has endured a couple of months of turbulence on the domestic politics front, also wants tax cuts.

He says they are vital for Europe's fourth-largest economy to keep growing.

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The EU has criticised a number of countries, most notably France and Germany, for allowing their spending shortfalls to top a limit of 3% of gross domestic product.

Italy also has been in the spotlight for not keeping a tight enough rein on public spending and debt levels.

Under the latest plan, the deficit is forecast at 2.7% in 2005, down from the 2004 target of 3.2% of GDP.

Without the changes, the government warned it would hit 4.4%.

Italy is not alone in having to reform its economy, with some of the region's other largest nations also looking at their pension and labour laws.

Spending cuts are not popular, however, and Italy's ruling coalition has creaked ominously.

Mr Berlusconi has battled on, even taking over the role of economy minister temporarily following the resignation of his ally Giulio Tremonti.

The prime minister was bullish about his prospect.