Austria could have sparked a fresh independence struggle after offering passports to German speakers in a province of northern Italy.
Vienna’s new coalition, which took power on Monday (December 18), made the proposition to residents in South Tyrol, also known as Alto Adige.
The region was ceded to Italy by Austria after World War One.
Despite moves by Fascist dictator Benito Mussolini to settle thousands of ethnic Italians there in the 1920s, German speakers still outnumber Italians by around two to one.
Eva Klotz, leader of South Tyrolean Freedom, told Euronews: “We’ve always defended the request of the double citizenship because for us it’s very important as a link with our Austrian motherland.
“Our fathers have been stripped of Austrian citizenship, and therefore of the Austrian motherland, with violence and against their will.
“There are a lot of people in South Tyrol and Trentino who are really still very faithful to Austria.”
Italians and Germans have their own schools and largely frequent different bars and restaurants.
But the region enjoys enormous autonomy and generous handouts from Rome, which have helped dampen secessionist sentiments in the province.
The double citizenship idea was included in a 180-page coalition programme signed on Saturday after weeks of negotiations by Austria's anti-immigration Freedom Party and the conservative People's Party.
It was denounced by Italian politicians.
"Get your hands off Italy," said Giorgia Meloni, the head of the right-wing Brothers of Italy party, which is part of former prime minister Silvio Berlusconi's centre-right opposition bloc.
"Brothers of Italy will raise the barricades in Alto Adige, in parliament and in every institution, and will ask President (Sergio) Mattarella to stop this undignified insult," she said in a statement.
The new Austrian government portrayed its plan to offer citizenship to Alto Adige residents whose first language is German as a pro-European gesture to promote "an ever-closer union of citizens of member states".
Benedetto Della Vedova, a junior foreign minister in Rome, dismissed this, saying the offer was couched in a "velvet glove of Europeanism" but bore the "scent of the ethno-nationalist iron fist".
It comes ahead of elections later this week in Catalonia, which declared independence from Madrid earlier this year, sparking a political crisis. Spain took control of the region, sacked its government and called for a new ballot on December 21.
“We see right now how towards Catalonia, Europe is behaving in a scandalous way,” added Klotz.
“This Europe that wants to keep and defend the power of the nation states at any price is really reactionary.
“Therefore the people will have to find a way, obviously still democratic and pacific, to change this Europe, in order to make it more modern, more democratic and in which this present model of a patchwork of nation states would be replaced by a model based on the right to decide with whom to stay or not to stay.”