Prime Minister Mario Monti, boosted by positive market reaction, takes a €30 billion austerity package to parliament today to shore up Italy's strained public finances and help stem a debt crisis threatening to overwhelm the euro zone.

The cabinet approved the mix of tax rises, pension reforms and incentives to boost growth in a three-hour meeting yesterday, opening one of the most crucial weeks since the launch of the euro more than a decade ago.

The package, dubbed a "Save Italy" decree by Mr Monti, aims to raise more than €10 billion from a new property tax, impose a new tax on luxury items like yachts, raise value added tax, crack down on tax evasion and bring forward measures to increase the pension age.

Caught between the competing needs of boosting growth and ensuring that cuts do not further depress a fragile economy, Mr Monti's technocrat government risks growing opposition after an initial honeymoon period with a public fed up with the scandals of the Berlusconi era.

"A package to cry over," the daily Il Secolo XIX headlined its front page today, over a picture of Welfare Minister Elsa Fornero, who broke down in tears while presenting measures that will mean an effective cut in income for many pensioners.

Most editorials today praised Mr Monti for biting the bullet in a difficult moment and for distributing the pain.

"There are times when you have to displease everyone and certainly, this, for Italy is one of those moments," La Stampa said.

Corriere della Sera praised Mr Monti for "participating in the sacrifices" of Italians by renouncing his salary as prime minister.

Il Sole 23 Ore, Italy's leading business daily, said the big question was how would the markets react to the provisions announced last night.

The spread between German and Italian 10-year bonds fell by 30 basis points and Milan's blue chip index was up by about 2.3 per cent.

However, newspapers that backed Mr Monti's predecessor, Silvio Berlusconi, derided the measures. "The government is crying while it screws us," was the headline in the daily Libero.

The measures come before a crucial week in the debt crisis with European leaders due to meet on Thursday and Friday in Brussels to try to agree a broader rescue plan for the bloc.

Italy, the euro zone's third-largest economy, has been at the centre of the crisis since mid-year, when its borrowing costs began to approach the levels which forced Ireland, Greece and Portugal to seek an international bailout.

Packed into a single emergency decree, the measures take effect immediately, before formal parliamentary approval, but Mr Monti will have to secure the backing of legislators within 60 days for them to remain in force.

Mr Monti, appointed at the head of a technocrat government to replace Mr Berlusconi last month, had been under growing pressure to come up with concrete measures to address fears about Italy's towering debt mountain.

He has held to Mr Berlusconi's pledge of a balanced budget by 2013, despite growing signs that Italy is heading into a recession that will make it extremely difficult to make inroads into a public debt of 120 percent of gross domestic product.

Deputy Economy Minister Vittorio Grilli said the measures outlined yesterday would allow the goal to be met despite a forecast that GDP would contract by 0.4-0.5 per cent in 2012.

Mr Monti, who brought forward cabinet approval of the measures by a day to Sunday, is due to give a briefing to the foreign press at 11am before presenting the measures to parliament in the afternoon.

The package is divided into €20 billion of budget tightening and an additional €10 billion  that will be pumped back into the economy in the form of measures to help companies and boost growth.

European Monetary Affairs Commissioner Olli Rehn welcomed the "timely and ambitious" measures and said the Commission would carry out a detailed assessment once it had received full details of the package.

Unions criticised the package and in an early sign of possible opposition to the Monti government, FIM-CISL, a union representing metal workers, said it would call a two-hour strike on Wednesday.

"Yet again, the sacrifices demanded fall mainly on salaried workers and pensioners and on the weaker sections of society," the union said in a statement.