The government had turned a vote on a law for minor economic reforms into a show of confidence in the lower house, as Berlusconi prepared to reassure his supporters of his leadership in a speech to parliament later today.
In the 44th confidence vote since the premier's People of Freedom party came to power in 2008, the bill -- which includes tax breaks and investment incentives -- was adopted by 317 votes to 293 with two abstentions.
The vote came just a week after Berlusconi suffered a trouncing in referendums that wiped out his plans to return Italy to nuclear power and dismissed a legal immunity law designed to keep him out of court.
The defeat represented a second blow to the embattled premier in less than a month, after his party lost critical mayoral votes in Milan and Naples in May.
The embarrassing setbacks have led to tensions within the government, with Berlusconi's coalition partner -- the populist Northern League party -- issuing a series of ultimatums yesterday in exchange for his continued support.
Deccan Herald is on WhatsApp Channels| Join now for Breaking News & Editor's Picks