Italy’s Chamber of Deputies yesterday voted in favour of a €54.2 billion austerity package, the second in three months aimed at calming skittish markets amid a European debt crisis.

The ballot was cast as a vote of confidence on the measures, designed to speed up implementation after the Senate backed the package last week and as investors’ reluctance to buy Italy’s debt drove interest rates to new highs.

Highly unpopular among ordinary Italians, the package was announced in a hurry last month by Prime Minister Silvio Berlusconi’s government in exchange for support from the European Central Bank, which took action in the bond market to ease Italy’s borrowing prices.

The package was delayed by weeks of opposition as Mr Berlusconi’s ruling People of Freedom party struggled to appease its Northern League coalition partner and the country’s powerful trade unions, creating no little unease on the markets.

The new measures include a rise in the VAT sales tax to 21 per cent, which will raise around four billion euros in a move aimed at reassuring markets concerned about Italy’s notoriously poor record on fighting tax evasion.

A controversial tax on the rich which had been abandoned by the government has been reintroduced, but will be much smaller than previously envisaged, affecting only annual incomes of over €300,000.

The retirement age for women in the private sector will be raised to 65 years old from 60, bringing it into line with the retirement age for men by 2014 and not 2016 as previously planned.

Severe cuts to lavish parliamentary privileges were scaled back to the chagrin of the public, amid accusations of politicians abusing favours and expenses while the country struggles to stave off financial ruin.