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Decision comes after PM's Democratic Party supported a call by its leader Matteo Renzi for a more ambitious government.
Calling for a "new start", Letta promises major reforms in country grappling with corruption and economic stagnation.
Former PM Berlusconi retracts previous statements about bringing down the government, as Letta wins confidence vote.
Victory would deal a major blow to former prime minister Silvio Berlusconi, but could leave Italy more frail than ever.
Senior lawmakers in centre-right PDL urge lawmakers to break with Berlusconi and support prime minister Enrico Letta.
Enrico Letta has called for a parliamentary vote of confidence amid a tug-of-war over Silvio Berlusconi's legal woes.
Italy PM Enrico Letta lays out pro-European vision ahead of vote considered a crucial step towards political stability.
New government led by Letta can go to parliament for vote of confidence by this weekend.
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