Another draft bill adopted by the cabinet abolishes the double salary received by government ministers who are also members of parliament -- a response to widespread anger in Italy against perks enjoyed by politicians.
A public fund to pay for redundancies "will be increased by exactly one billion euros," Prime Minister Enrico Letta told reporters.
Italy is stuck in its longest-ever recession and unemployment has risen to record highs, putting unprecedented pressure on the redundancy fund.
Letta also said the government would aim to reform by a hugely unpopular property tax introduced by his predecessor Mario Monti.
As a first step, payment of that tax due next month would be suspended, according to the bill.
Deputy Prime Minister Angelino Alfano, a leader of People of Freedom party, said the property tax measure was "a breath of oxygen for families".
The centre-right party has threatened to pull out of the government and bring it down if the tax is not abolished by August and reimbursed.
Letta said that fiscal pressure had to be eased, calling the proposals adopted "a first response for families, businesses and workers".
The draft bills now have to go before parliament.