ROME (Reuters) - Italy's lower house of parliament on Thursday approved a package of budget measures including a sales tax hike and a cut in some payroll taxes, aimed at helping the government reach its deficit-cutting targets.

Approval was expected after Prime Minister Mario Monti's government won three confidence votes on Wednesday that it had called to speed up passage of the budget.

The measures will now move to the Senate for approval, which is expected before Christmas.

The Chamber of Deputies approved the plans by 372 votes against 73.

The budget, enshrined in a so-called Stability Law, is central to Monti's efforts to lower Italy's public deficit to 1.8 percent of output next year from a targeted 2.6 percent in 2012.

Monti agreed at the end of October to overhaul the first draft of the budget legislation by replacing a planned income tax cut with a reduction in payroll taxes paid by employers.

The package still includes a one percentage point rise in the highest value-added tax (VAT) rate, which will go into effect next July, bringing it to 22 percent. The lower 10 percent rate will not be increased as previously planned.

The Stability Law is expected to be one of the final pieces of major legislation approved under Monti before Italy gears up for a national election.

(Reporting by Giuseppe Fonte,; Writing by Catherine Hornby; Editing by Hugh Lawson)