Rome, Nov 13 (IANS): Italian lawmakers Saturday gave their approval to austerity measures demanded by the European Union (EU), paving the way for the resignation of Italian Prime Minister Silvio Berlusconi and the formation of a new government.

Italy's lower house of parliament passed the measures, a day after the Italian Senate approved the package aimed to stave off bankruptcy, Xinhua reported.

Italy's state debt stands at about 1.9 trillion euros ($2.6 trillion).

Earlier this week, Berlusconi said he would resign after the government finally approves the new law that includes among others, labour reform proposals, aimed at increasing employment among women and young people, and a sell-off of state-owned assets and agricultural land.

Berlusconi, who is believed to be replaced by the former European Commissioner Mario Monti, is expected to hand in his resignation to President Giorgio Napolitano later Saturday, RIA Novosti reported.

After Berlusconi's resignation, Italian President Giorgio Napolitano will start consultations with parliamentary parties as soon as Saturday or Sunday, in order to form a new emergency technocrat government.

If such efforts fail, Napolitano could dissolve the parliament and call a snap election.