The measures aim to balance the budget by 2014 The Italian Senate has passed a tough austerity budget, including cuts of 48bn euros ($67bn; ?42bn) over three years.The lower house must also adopt the measures in a vote on Friday. Correspondents say that is likely.
Italy has one of the largest debt mountains in the eurozone and wants to avoid any need for a bail-out.
Italian PM Silvio Berlusconi has said Italy is on the front line of the eurozone's economic difficulties.
Italy raised 2.97bn euros ($4.2bn; ?2.6bn) through a sale of 15-year government bonds on Thursday, but had to offer a 5.9% rate of return - an all-time high for such bonds.
'Monster' threatBBC Europe editor Gavin Hewitt, in Rome, says both the government and the opposition know that Italy is under fierce scrutiny by the markets due to its large debts.
Earlier this week, the International Monetary Fund (IMF) asked Italy to ensure "decisive implementation" of spending cuts.
In a report, the IMF said Italy must make efforts to reduce public debt, maintain the stability of its financial sector and introduce structural reforms to boost growth.
The package was put to parliament ahead of schedule, amid concerns that Italy may be the next country to be hit by the eurozone's debt crisis.
Opposition parties voted against the package but agreed not to delay it, so as not to prolong uncertainty in the markets.
It passed by 161 votes to 135 in the Senate on Thursday.
Italy's Finance Minister Giulio Tremonti hopes his package will cut the deficit to zero by 2014 from this year's 3.9% of gross domestic product.
He said in parliament that, without the budget, ''the monster debt from our past will swallow up our future''.
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