The government has said the budget "reverses" the austerity trend of recent years but critics including trade unions and the business lobby Confindustria warn that it is not enough to stimulate growth.
The budget passed with 167 in favour and 110 against.
It includes the creation of a fund with proceeds from bureaucratic cuts to be used to lower income tax, as well as measures to encourage hiring of workers, higher taxes on large pensions and the introduction of a new benefits scheme for the unemployed.
Italy's economy, the third-biggest in the eurozone, ended two years of contraction in the third quarter with zero-percent growth but unemployment is still at record-high levels and thousands of businesses have been forced to shut down in the crisis.
SEE ALSO: Italy adopts 2014 budget to tackle social crisis
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