The Italian parliament gave final approval to a package of economic reforms in a vote on Saturday which clears the way for the resignation of Prime Minister Silvio Berlusconi and the formation of an emergency government.

Berlusconi, who failed to secure a majority in a crucial vote on Tuesday, promised to resign once parliament passed the law, demanded by European partners to restore market confidence in Italy's strained public finances.

He is expected to hand in his resignation to President Giorgio Napolitano later on Saturday.

Former European Commissioner Mario Monti is expected to be given the task of trying to form a new administration to face a widening financial crisis which has sent Italy's borrowing costs to unmanageable levels.

(Reporting By James Mackenzie)