The Italian cabinet has agreed a package of economic reforms aimed at easing pressure from financial markets over the eurozone debt crisis.
The move comes a day after the Italian stock market suffered its worst session since the start of the global crisis in October 2008.
The measures still have to go before parliament for final approval.
Italian Prime Minister Silvio Berlusconi last week made promises to get Italy's finances in order at a European summit under pressure from eurozone leaders France and Germany but there have been fears he could be held back by infighting in his government.
He said the retirement age would be raised to 67 beginning in 2026, state assets will be sold off and labour legislation will be overhauled to make it easier to fire employees - a proposal that infuriated trade unions.
Mr Berlusconi's key coalition partner, the populist Northern League party, has also warned the prime minister against any increase in the pension age.
Among other measures being considered are reforms to boost competition among lawyers and dentists, a major boost to infrastructure projects and reforms to ease Italy's notoriously complex bureaucracy.
Mr Berlusconi is keen to travel to the G20 summit in Cannes tomorrow with results in hand.
Italy's leading companies and eurozone leaders France and Germany have urged Berlusconi to move quickly on long-promised reforms to cut debt and boost growth but the government has been mired by recent infighting.
"The commitments undertaken in Europe to reduce public debt and launch a wide programme of structural reforms must be honoured with speed and coherence," Bank of Italy governor Ignazio Visco told reporters.
Mr Visco, who this week replaced new European Central Bank president Mario Draghi, assured investors that Italian banks were "stable" but called for "decisive" action to put Italy's public finances in order.
