The fund was among the proposals drawn up at a summit on Wednesday, during which regional leaders and mayors came up with a three-year anti-smog plan.
Other measures include reducing home heating by two degrees, cutting the speed limit by 20kms/hr and making travel on public transport cheaper.
Milan and the nearby town of Pavia on Wednesday wrapped-up a three-day initiative that saw cars partially banned from the streets.
Traffic restrictions have also been in place in the southern city of Naples, where only vehicles operating to an emissions standard known as Euro 4 are allowed to circulate this week.
In Rome, owners of cars with odd-numbered plates were ordered to leave them at home on Monday, while on Tuesday cars with even-numbered plates were targeted under a measure used three times this month with limited effect.
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Air pollution contributed to 84,400 premature deaths in Italy in 2012, according to the latest report for the European Environment Agency. Of these 59,500 were attributed to elevated levels of fine dust particles in the air, the problem which has caused this week's alerts.
After several weeks with little or no rain in much of Italy and weather balmy enough to have sent many Romans to the beach for their Christmas lunches, pollution levels measured by the number of fine dust particles in the air have shot up.