Italian Premier Mario Monti easily won a vote of confidence in the Senate on Thursday, signaling parliamentary approval of the government's euro30 billion ($39 billion) package of tax hikes and pension changes.
The austerity package is intended to save the country from financial disaster and follows rising concerns in the markets that Italy will find it difficult to pay off its massive debts, which stand at around euro1.9 trillion ($2.5 trillion).
The vote passed 257-41, following passage in the lower Chamber of Deputies last week.
Had it been defeated, Monti and his government of technocrats would have been forced to resign. The new government is tasked with making sure that Italy did not become the next victim of Europe's debt crisis.
In remarks to lawmakers prior to the vote, Monti said the package was "of extreme urgency and will allow Italy to face the European crisis with its head held high."
Among the most disputed measures in the legislation is a reform to Italy's generous pension system, which will require Italians to work longer. Many of former premier Silvio Berlusconi's loyalists, who make up Parliament's largest party, also opposed Monti's decision to revive a home property tax that Berlusconi had eliminated.
Unions staged strikes and demonstrations last week to protest the measures.
Monti has said his package of tax hikes, reforms and growth-boosting measures was the only way to save Italy financially and give young Italians a foundation for economic recovery and growth.
Data released Wednesday showed that Italy, the eurozone's third-largest economy, contracted 0.2 percent in the third quarter, furthering predictions of a mild recession in 2012.