Nearly all Seria A and B clubs are in the red, and the game's authorities are urgently seeking a way of addressing the crisis.

Now a Football League assembly has backed a reform package aimed at reducing costs, according to Italian newspaper reports.

Among other proposals likely to be voted on at a general assembly of the League in December is the introduction of individual performance-related pay.

A reduction in the number of teams relegated from Serie A and restrictions on transfers and the size of squads are also under discussion.

The issue of a salary cap was raised by AC Milan vice-president Adriano Galliani last season, and has been backed by Lazio chief Sergio Cragnotti.

A four-man taskforce headed by Galliani proposed the introduction of a salary cap system for the 2002-2003 season.

According to the plan, clubs would have to restrict their total spending on players' salaries to the level of their incoming revenue.

For the 2003-2004 season, the cap would be set at 80% of revenue.

Clubs would be limited to registering 25 players for the championship.

Serie A club Udinese began this season with 41 first-team squad members.

Salary caps are widely used in sports in the United States but are a new idea in European soccer.

The daily Gazzetta dello Sport reported that League president Franco Carraro has suggested an end to collective bonuses based on a team's end-of-season position.

Bonuses

He is said to prefer a move towards individual performance bonuses which can be paid at any time.

AC Milan announced on Monday that their new coach Carlo Ancelotti had signed a contract based on performance-related pay.

Galliani said Ancelotti had a "relatively low fixed salary but an important bonus based on results".

The Milan vice-president also said the club would be introducing that mechanism into future contracts for players.

But Napoli owner Giorgio Corbelli believes smaller clubs need to be protected against the instability caused by the annual relegation of four teams from the 18-team Serie A.

Calling for a reduction to two relegation spots, Corbelli told Corriere dello Sport: "With less of a risk of relegation, we will have a better negotiating position with sponsors who count a lot on teams stopping in Serie A".

Other club presidents argued that reducing the movement between the two divisions would ease the pressures on clubs.

Corbelli also proposed that clubs be limited to using just one coach in a season and that players be restricted to one transfer per season.