Veltroni said: "As is customary in all Western democracies, and as I feel it is right to do, I called the leader of the People of Freedom, Silvio Berlusconi, to acknowledge his victory and wish him good luck in his job."
Final results from Italy's interior ministry gave Berlusconi's 46.8 per cent to Veltroni's 37.6 per cent in the lower house
In the senate, Italy's upper house, Berlusconi took 47.3 per cent, while Veltroni took 38 per cent.
Berlusconi had been widely expected to win in the lower house, but his clear victory in the Senate will strengthen his ability to push through structural changes needed to pull Italy away from the brink of recession.
Initial exit polls had shown Berlusconi to have been only narrowly ahead, but his lead extended as the counting went on.
"Berlusconi won because he has a strong coalition and because people feel that on the other side, the government is going to take them nowhere," Franco Pavoncello, a political science professor at Rome's John Cabot University, said.
The early election was called after the centre-left coalition government of Romano Prodi collapsed in January, having completed 20 months in power.
Both Berlusconi, a media tycoon and two-time former prime minister, and Veltroni, a former mayor of Rome, had promised to reverse Italy's economic downturn and said that Italy needs more police to tackle crime.
The International Monetary Fund forecasts that the Italian economy, the world's seventh largest, will grow 0.3 percent this year, compared with a 1.4 percent average growth for the 15-country euro area.
James Walston, a political scientist at the American University of Rome, sid that people woould expect Berlusconi "to pull big rabbits out of his hat, but he's only going to give them small ones".
Berlusconi said on Monday that his priorities were settling the future of state-controlled airline Alitalia, which the outgoing administration was
struggling to privatise, and clean up a long-standing rubbish crisis in Naples.