As expected, Prime Minister Romano Prodi's new center-left government easily won the confidence vote in the Chamber of Deputies. The 344-268 vote came more than six weeks after general elections.
In one of the tightest elections in modern Italy, the center-right coalition led by Silvio Berlusconi was ousted from power leading to the formation of a center-left government last week.
Ahead of the confidence vote Tuesday evening, Mr. Prodi told parliament his priority was to pull Italy out of economic stagnation and restore budgetary discipline.
The prime minister said public accounts are worsening. The situation, he added, appears more critical than in '96, when an effort was made to enter the euro zone.
He added that Italy is now back under the spotlight of the international markets.
Mr. Prodi said: "We are in a situation in which there is no stability or growth and today's OECD figures can only increase our concern."
The Organization for Economic Cooperation and Development, in its annual report released Tuesday, said Italy's economy should grow one-point-four percent this year, faster than expected.
It warned that Italy's growth is likely to remain below the average euro-zone pace "without bold structural reforms by the new government."
To conform with the rules governing the euro currency, Italy must bring its budget deficit to within three percent of GDP by the end of 2007. Italy's new Economy Minister Tommaso Padoa Schioppa is scheduled to meet Wednesday in Rome with E.U. Monetary Affairs Commissioner Joaquin Almunia.
Before the confidence vote Tuesday, Mr. Prodi also said Italy planned on taking an active role in the Middle East peace process. He said Italy's commitment to fighting terror was firm and complete and would be carried out in cooperation with its European partners and the United States.