Rome - Italian Prime Minister Silvio Berlusconi's cabinet approved earlier today some tax cuts which are worth 2.4 billion euros (3 billion dollars), which will be used for poor families and also for pensioners.

The move is part of a package aimed at boosting the country's recession-hit economy and stimulate consumer confidence, Economy Minister Giulio Tremonti said.

It follows the introduction earlier this week of a state- sponsored "credit card" for the needy.

The tax cuts approved Friday stand to benefit some 8 million Italians, the government estimates.

Speaking after the cabinet meeting, Berlusconi said the government remains committed to shifting some 80 billion euros from the state to the private economy, but he did not provide more details.

However, he did say the government's package to counter a recession that is expected to last through 2009, won't be as big as similar measures approved or expected by Germany and France due to Italy's huge debt.

The European Union's executive, the Commission, this week urged its 27 member nations to allocate some 170 billion euros to stimulate the continental bloc's economy - a move which proportionally translates to each country contributing around 1 per cent of GDP.

However, fiscal stimulus measures contained in the Italian government's plan reportedly amount to 5 billion euros, or less than 0.5 per cent of GDP.

Italy's public debt - at around 105 per cent of GDP - is the highest in Europe in terms of the size of the country's economy. This situation reduces the government's ability to cut taxes and raise spending as a means to lift the economy.

"We did a good thing without changing the budget, sticking to our goal of cutting the debt below 100 per cent (of GDP) in 2011," Berlusconi said, of the government's package.

The premier's words were echoed by Tremonti, who stressed how Italy "has the third-largest debt in the world, but it is not the third-largest economy." The United States and Japan in absolute terms have higher public debts.

Last week the International Monetary Fund (IMF) which expects the Italian economy to shrink by some 0.6 per cent in 2009, urged the government to take into consideration the country's "huge public debt" in tailoring its response to the global economic slowdown.