The Italian senate has passed a bill of financial austerity measures demanded by the European Union.
Prime Minister Silvio Berlusconi has promised to resign once the bill, which is expected to pass a special weekend session of the lower house tomorrow, becomes law.
The package increases VAT from 20 per cent to 21 per cent and freezes public sector salaries until 2014 as part of an attempt to save €59.8bn (£51.25 bn).
The retirement age will rise from 60 to 65 for women, bringing it in line with the age for men.
Measures to combat tax evasion will also be implemented.
Meanwhile in Greece new prime minister Lucas Papademos is choosing his ministers today, with their first task being to sign the country up to the terms of the EU bailout package.
Papademos is a former vice-president of the ECB and replaces George Papandreou in the post.
Former European Commissioner Mario Monti was appointed senator for life in Italy by President Giorgio Napolitano earlier this week and is expected to be appointed Prime Minister of a technical government once Berlusconi has resigned.