"Growth and reducing the dimension of the government are the inspiration and motivation for today's cabinet meeting," Premier Mario Monti said.
The government will also wind down agencies within the Treasury Ministry and reassign their functions to existing departments.
The actions take aim at one of the most persistent criticisms launched at the Monti government: Too many reforms, like raising the pension age and reimposing a tax on primary residences, penalize ordinary Italians while not reducing the nation's bloated public sector.
Monti's government of technocrats took office in November with a remit to protect the country from the sovereign debt crisis. Borrowing costs steadily dropped until contagion fears ignited in recent weeks. They skyrocketed this week after Spain accepted a bailout for its banks that investors fear could add to its public debt. The move raised perceptions that Italy could be next to need help, increasing pressure on Monti to move swiftly.
Among the measures announced, the government plans to raise $12.6 billion through the sale of financial and oversight companies controlled by the Treasury, and use the money to bring down the debt and pay off creditors. The government also plans to sell real estate, including abandoned military barracks that have lain unused since the end of the Cold War.
The government will also simplify bankruptcy filings so companies can restructure debt and relaunch their businesses, as well as shorten the length of civil proceedings, something that has deterred foreigners investing in Italy.
"Growth is also slowed by the slow pace of civil trials, which will be accelerated by putting a filter on appeals," Justice Minister Paola Severino said.
Tax breaks will also be extended to small- and medium-sized businesses that power the economy, in particular construction firms, which have been hit hard by the crisis.