Prime minister Mario Monti unveiled an ambitious economic crisis plan on Thursday, with reforms aimed at appeasing global leaders and financial markets as well as restoring Italy's international credibility.
Italy must stop being considered Europe's "weak link," he said as he announced austerity measures which would be balanced by "growth and equity" to help save the country from the crisis and affirm its place in the eurozone.
As well as planned cuts, Italy must "invest in its young and talented" and "tackle unfair privileges" enjoyed by certain sectors of society, he said.
Monti, who is racing to implement initiatives demanded by Europe, including a pensions and labour market overhaul, told Italians fearful of losing their sovereignty that the reforms were not "imposed by external forces."
"It's not a case of them on one side and us on the other. We are Europe."
"The future of the euro also depends on what Italy will do in the next few weeks," he said.
Before the promised reforms can be set in stone, the premier's new cabinet must go to a confidence vote in the Senate later on Thursday, and in the lower house on Friday.
Monti, who replaced the billionaire media mogul Silvio Berlusconi at the top, is expected to win the votes easily. But he could face a political backlash when he begins implementing the painful and delayed economic reforms.
While Monti has won endorsements from all of Italy's main political forces so far, he faces a major challenge in steering a course through a fractious political world, with particularly intense sniping from Berlusconi allies.
Thousands of students took to the streets in Italian cities ahead of his speech. In Milan, they threw flares at riot police during protests against a technocratic government they fear will act in favour of fat cats and bankers.
The soft-spoken economist appears, however, to have already garnered the support of more than half of Italians, according to a poll by IPR Marketing.
The inclusion of key pension and labour reforms sought by the EU in Italy's crisis game plan is expected to reassure markets.
"We need measures to make the economy less fossilised, help new industries grow, improve public services and favour youth and female employment," he said.
"If we fail, if we don't carry out the necessary reforms, we will also be subjected to much harsher conditions," Monti warned.
Politics professor Giuliano Noci said the programme "includes everything which one could imagine carrying out in Italy and would allow -- if carried out -- a truly great revival of the country."
Monti's reforms will be "the first step in an operation to restore credibility lost under Berlusconi," the Repubblica daily said.
The technocrat faces his first international test next week, when he is expected to travel to Brussels, Berlin, Paris and London, it said.
German Chancellor Angela Merkel urged him Thursday to move fast to implement the "crucial" reforms, while Eurogroup chief Jean-Claude Juncker insisted on the EU's "full confidence" in Rome's ability to overcome the current crisis.
But Italy's economic commentators sounded a cautious note.
Il Sole 24 financial daily said Italy's future was "on a knife-edge."
Loretta Napoleoni, an economic analyst for Il Fatto Quotidiano newspaper who teaches at Cambridge University, said Monti risked obeying the European Union's orders unquestionably, throwing Italy into "the worst recession since 1929."
Tense markets had fluctuated before and after Monti's nomination, with the rate on Italian 10-year government bonds hovering around the 7.0-percent warning threshold that set off alarm bells around Europe and beyond.
Milan's stocks rose briefly following Monti's speech but dropped back down into the negative in afternoon trading, in line with other European markets.
Italy has to issue 440 billion euros (about $590 billion) in debt next year.
The Italian Banking Association (ABI) said on Thursday it will back a "Bond Day" when Italians can help their country ease its debt mountain of 1.9 trillion euros ($2.6 trillion) by buying debt commission-free.
Despite a 10-year stint in Brussels, Monti has never held office in Italy but has already shown his mettle by insisting his government has to stay in power until 2013 -- the scheduled date for the next general election.
Berlusconi, who has vowed a comeback, bowed to intense market pressure and resigned on Saturday to cries of "Buffoon!" as Italians danced in the street.
On his last day in office, his singer friend Mariano Apicella released an album of love songs written by the outbound premier.
"Stay, and leave me your heart," says one lyric. Another says: "I adore you and I already miss you."