Monti's government has held a confidence vote on the unpopular austerity measures days before Christmas [AFP]

Mario Monti, the Italian prime minister, has easily won a vote of confidence in the Senate, signaling parliamentary approval of the government's $39bn package of tax hikes and pension reforms.

The austerity package is intended to save the country from financial disaster and follows rising concerns in the markets that Italy will find it difficult to pay off its massive debts, which stand at around $2.5 trillion.

The upper house voted 257 to 41 for the government, following a similar easy win in the lower house last week.

Monti said he was happy with the vote and Italy could hold its head high in Europe after passing the package of spending cuts, tax rises and pension reform.

The budget is intended to reverse a collapse of market confidence which has pushed Italy's borrowing costs to untenable levels and put it at the heart of Europe's debt crisis.

Addressing the Senate before the vote, Monti said his technocrat government had to push through the budget as fast as possible.

"Today this chamber concludes a rapid, responsible, complex job... on a decree that was passed in extreme emergency and that enables Italy to hold its head high as it faces the very serious European crisis," Monti declared.

Source: Agencies