Berlusconi, who also served briefly as prime minister from 1994 to 1995, said he intended to pick up from where he left off in 2006, when he narrowly failed to be re-elected after a five-year term.
Speaking to La Stampa, an Italian newspaper, Berlusconi said: "We have 100 days to avoid disappointing those who put their faith in us, and five years to change and modernise this country."
He has promised to fight crime, crack down on illegal immigration and clear the mounds of rubbish in Naples that have paralysed the southern city.
Berlusconi, 71, aims to hold his first full cabinet meeting in Naples, saying the rubbish crisis is a national problem because it has stained Italy's image abroad.
Another issue will be how to rescue Alitalia, the state-controlled airline, from possible bankruptcy by finding a buyer.
The International Monetary Fund (IMF), which sees the Italian economy growing at just 0.3 per cent this year, said Berlusconi's promised tax cuts should be aimed at stimulating demand and that he must ensure they are paid for by spending cuts.
Masood Ahmed, the IMF's external relations director, said: "Any tax cuts need to be at least fully [met] by expenditure reduction, given the pressing need for fiscal consolidation."
Berlusconi's cabinet, which he announced on Wednesday, is packed with his right-wing allies from the National Alliance and the strongly anti-immigrant Northern League.
The new government is expected to take a tough line on immigration and security issues.
Among the cabinet is Roberto Calderoli, a Northern League politician known for his anti-Islamic rhetoric, who was once blamed for provoking riots in Libya by wearing a T-shirt featuring a Danish cartoon of the Prophet Muhammad.
A charity in Libya chaired by leader Muammar Gaddafi's son warned of "catastrophic repercussions" if he had a cabinet post.
Commenting on Berlusconi's appointments, Massimo Franco, who writes a column for the Italian newspaper Corriere della Sera, said: "He has created a government in his own vision and likeness, and this is a huge opportunity and responsibility."