Italian MP’s will vote on Wednesday whether or not to endorse Prime Minister Silvio Berlusconi’s 54 billion euro austerity plan.
The measures were approved by the Senate on Tuesday and Berlusconi says he is confident he will get the support of the full parliament.
The country’s public debt stands at 1.9 trillion euros.
After a meeting with the Italian PM the European Commission President, Jose Manuel Barroso, said the measures should be rigorously implemented. He added that they should go some way to removing obstacles to economic growth.
Wednesday’s vote of confidence is also being seen as a test of Berlusconi’s leadership.
Analysts say investors have simply lost faith in Italy’s ability to extricate itself from the eurozone debt crisis and that the implications for EU monetary union are worrying.
The government has declined to confirm a Financial Times report claiming its asking China to buy substantial quantities of its debts, although the spokesman did admit a meeting with Chinese officials had taken place.