Italy's finance minister, Giulio Tremonti, has started crisis talks with Jean Claude Juncker, president of the Euro Group, in Luxembourg.
The meetings began on Wednesday just hours before Silvio Berlusconi, the Italian prime minister, addressed parliament on the country's economic troubles.
The developments came as interest rates on Italian bonds rose to record highs, reflecting investor nervousness and, possibly, Italy's need for a financial bailout.
Financial market tensions have risen sharply since early July as attention focused on splits in Berlusconi's centre-right government and, in particular, on discord between him and Tremonti, who is seen as the anchor of budget stability.
A 48bn-euro austerity package, passed in record time last month and intended to help the government bring the budget into balance by 2014 and control Italy's huge public debt, has failed to calm market fears.
Worries have especially focused on the fact that a large part of the spending cuts and tax measures will not take effect until after the next scheduled elections in 2013 and will do little to stimulate Italy's slow-moving economy.
With Spain also under market attack and doubts growing about the stability of the whole euro zone, the problems are already beyond the capacity of a single government to fix.
Al Jazeera's Laurence Lee, reporting from Rome, said that Italy's bond interest rate had hit six per cent.
"If that level rises to anything above 6.5 per cent, it becomes Greece, and it becomes unsustainable," he said.
Berlusconi, weakened by scandals, had been largely silent over the past weeks, but spoke on Wednesday to parliament, portraying the crisis in as good a light as possible.
He said Italy needed an "immediate action plan" to relaunch growth aimed at soothing concerns over a possible debt crisis.
"We need an immediate plan of action which responds to the markets" that want to see that Italy is prepared to take steps necessary to attain growth needed to keep on top of its massive debt, he said.
Berlusconi also said that Italy had responded strongly through the crisis.
"We have solid economic fundamentals, our banks have liquidity and are solvent," he said.
"Our country has a solid political system which has shown itself able to approve in only three days a manoeuvre of almost 80 billion euros."
Our correspondent said: "The fact of the matter is, as of now, it looks like the markets aren't going to take on what he said."
Berlusconi was due to meet employers' groups and unions on Thursday to try to draw up an economic stimulus plan.
Despite a public debt equivalent to 120 per cent of gross domestic product, Italy has until recently stood apart from the crisis thanks to a relatively modest budget deficit, high private savings and a conservative financial system.
However, concerns about the government's ability to overcome internal divisions and revive the stagnant economy have changed perceptions markedly in recent weeks, after warnings from credit ratings agencies that they could cut Italy's credit rating.
Source: Al Jazeera and agencies