Italian Premier Mr Silvio Berlusconi's government tonight won a vote of confidence to push through a bitterly contested pension reform bill. The vote was won by 333 to 148.
Had the government lost, it would have been forced to resign. The pension plan aims to scale down Italy's generous state provisions and cut the country's massive debt.
Economists have warned that given current birth rates, Italy will not be able to sustain its current pension system.
The new system is expected to save the state some 0.7 per cent of gross domestic product each year from 2012 to 2018.
Currently, Italians can claim a full state pension at 57, provided they have paid 35 years of contributions. The reform would mean they would have to work until 60.
Others could claim pensions regardless of age if they have paid 40 years of contributions.
Women could still retire at 57, but would be given a lower state pension. The changes would come into effect in 2008.
The plan would also offer pay bonuses until 2007 to those who postpone their retirement or continue to work part time.
The reform has been strongly opposed by the country's three largest labour unions, which have staged a series of walkouts over the plan, saying the proposed reform is not necessary.
It has also caused tensions within Mr Berlusconi's coalition, with the Northern League party threatening at one point not to back the bill.
During his first stint as premier in 1994, Mr Berlusconi tried to drastically scale back pensions, but he faced massive protests by the unions.
The issue also caused tensions among Mr Berlusconi's partners, which eventually led to the collapse of his government.