Italy is to bring forward the implementation of the austerity measures it approved only a month ago.
Prime Minister Silvio Berlusconi also promised to balance Italy’s books by 2013 – his part in the fightback against the wave of financial market panic.
Berlusconi also plans to ask Parliament to amend the constitution to make it compulsory for governments in Italy to keep balanced budgets.
And he said he had agreed with French President Nicolas Sarkozy to convene an emergency summit of the G7 leading world economies. France currently holds the presidency of the G7, G8 and G20 economic powers.
Italy has been badly hit on the stock and bond markets in recent weeks. Investors are concerned about its high public debt, and weak economic growth, as well as signs of tension in Berlusconi’s centre-right coalition.
It comes after the crises in Portugal, Ireland and Greece. Investors are also concerned about the health of the Spanish economy.
Berlusconi’s announcement followed 24 hours of violent turmoil in the financial world, with an estimated 3.4 trillion euros wiped off shares globally.