Italy's lower house of parliament today approved an unpopular austerity package totalling 25 billion euros aimed at bringing the public deficit under control and reassuring markets.

Sponsored by the centre-right government of Prime Minister Silvio Berlusconi, the law passed by 321 to 270 votes, with four abstentions.

The law was approved by the Senate two weeks ago and was the object of a confidence vote yesterday.

The plan calls for a three-year salary freeze for public workers, a 10 percent cut in ministry budgets, less funding for local governments and more action to combat tax evasion, among other measures.

The plan also raises the retirement age of public and private workers by more than three years by 2050.

The austerity package is aimed at reducing Italy's public deficit to 2.7 percent of gross domestic product in 2012 compared with 5.3 percent last year.

What Berlusconi has called "essential sacrifices to save Italy's future" have sparked protests and strikes by a cross-section of Italian society including judges, diplomats, civil servants, public sector doctors and museum curators.

Italy's largest union, the far-left CGIL, staged a general strike on June 25 to protest the plan, with hundreds of thousands of people taking to the streets.