An Italian man who received government welfare for years due to blindness has been arrested on suspicion of fraud after being seen driving, window shopping and riding a scooter, news reports have said.

The man in Palermo, Sicily, received at least €170,000 in benefits since 2008 after attesting that he was "totally blind" as a result of a congenital problem, local media reported.

Italy's financial police were alerted after the man renewed his driver's licence in 2018 despite his earlier declaration, media said.

During stake-outs, authorities witnessed the man driving - while dialling on his phone at the same time - looking at shop windows while walking through a busy mall and teaching his daughter to ride a bike.

The 40-year-old was also seen riding a scooter without insurance, Palermo Today reported, adding that the man was nicknamed "Berlusconi," after Italy's former prime minister with a history of legal problems.

The man was already known to authorities, having received a jail sentence of nearly 15 years in the first instance last year for being part of a group that staged fake traffic accidents to receive insurance payouts.

The case is under appeal.

Despite being the owner of a garage, the man also received Italy's so-called "basic income," or monthly welfare payment given to the country's poorest citizens.