Economy Minister Giulio Tremonti promised on Sunday to meet Italy's budget commitments after the European Central Bank stepped up pressure for action by the struggling center-right government.
Tremonti, under mounting pressure to present a credible plan to fulfill a pledge of balancing the budget by 2013 and cutting Italy's 1.9 trillion euro debt pile, told a business conference in the northern town of Cernobbio that the target would be met.
However he admitted that a hastily put-together package of measures presented to parliament in August and now undergoing substantial revision, had been incomplete.
When you take measures in four days you can make mistakes, it's true, he told a conference discussion.
The annual Ambrosetti forum in Cernobbio on the shores of Lake Como this weekend brought growing doubts about the 45.5 billion euro austerity package to a head following a week of rising market pressure on Italian government bonds.
Both ECB President Jean-Claude Trichet and Italy's head of state, President Giorgio Napolitano issued strong calls for swift action following widespread criticism of the haphazard way in which the plan was being handled.
Marco Tronchetti Provera, chairman of tyremaker Pirelli, one of the icons of Italian industry, said Tremonti's speech to the conference had been clear but had not eliminated doubts about the gravity of the situation.
I repeat that anyone who is not concerned about this situation is making a mistake, he told reporters.
The head of Confindustria, Italy's largest employer federation also took aim at the government during the conference, saying the plans presented so far did not do nearly enough to stimulate the country's anaemic growth rates.
Underlining the growing concerns, the premium investors demand to hold Italian 10 year bonds rather than benchmark German debt rose on Friday to 331 basis points, the highest since the ECB started buying Italian paper in August.
Yields on 10-year Italian bonds ended the week at 5.29 percent, climbing back up toward the 7 percent level generally regarded as unmanageable.
With the spreads over German debt widening ominously, there was growing speculation over whether the ECB would continue purchasing Italian debt, a strategy that has caused sharp divisions within the Frankfurt-based central bank.
The ECB has been buying Italy's bonds in the market to try to hold down yields and stop Rome's borrowing costs spiralling out of control but there has been a growing sense of frustration that the government has not done enough itself.
Our biggest concern is that the ECB might halt its purchases of Italian bonds, which would cause spreads to widen again, the head of Confindustria, Emma Marcegaglia, told reporters. In this case, Italy would have huge problems.
On Saturday, Trichet declined to comment on the bond buying programme ahead of a Governing Council meeting on Thursday.
Italy, the euro zone's third largest economy, has been dragged ever closer to an emergency that could overwhelm existing euro zone bailout mechanisms and it would be hard for the ECB to withdraw support without risking a crisis.
But there have been worries in Germany, the euro zone's effective paymaster, that the ECB is blurring the lines between monetary policy and governments' own fiscal responsibilities.
Italy's Foreign Minister Franco Frattini, who said on Saturday that the government was pressing the ECB to keep up the purchases, backtracked on Sunday, saying the central bank was independent and Rome was not exerting pressure.
Tremonti offered no substantial new pledges on the timing or substance of the austerity package, which has been subject of repeated changes and dispute by different factions in Prime Minister Silvio Berlusconi's divided coalition.
However he repeated his longstanding call for jointly issued euro bonds, which have been rejected by Germany.
The euro bonds will absolutely be done, he said. Either we do euro bonds or we will have critical problems, he said.
Frattini told reporters the Senate would approve the new package by the end of the week and that approval from the Lower House would follow swiftly.
I don't see any reason why the government should ask for a confidence vote on the budget, Frattini added.
Discussion of the package was due to be completed in the Senate budget committee late on Sunday, opening the way for a full debate on the floor of the upper house on Tuesday. Final approval, following lower house examination, is due by September 20.
Unions have also stepped up pressure and the CGIL, Italy's biggest union, has called a strike for Tuesday.
(Writing by James Mackenzie, editing by Rosalind Russell)