Italians "should not have to pay IMU (the housing tax). This deal is the basis of the agreement which led to the formation of the grand coalition government" and "we will never give up on it," Berlusconi said in a statement.
The centre-left and right coalition, an uneasy alliance between former rivals, has been under increasing pressure since the former premier's definitive conviction for tax fraud last week, which left Berlusconi supporters reeling.
The media magnate's People of Freedom party (PdL) reacted furiously to a document issued by Economy Minister Fabrizio Saccomanni on Thursday which suggested getting rid of the tax altogether may damage the Italian economy.
The tax brings in some €4 billion in revenues per annum and Saccomanni said abolishing it would mainly benefit the rich.
Berlusconi won the 2008 elections largely by promising to abolish the loathed IMU, which was reintroduced at the end of 2011 by Mario Monti's technocrat government as it struggled to clean up Italy's finances.
Amid speculation the shaky coalition may fall apart in the autumn – a period post the summer recess which Letta has warned will be politically "hot" – the PdL is fighting hard to keep what is a clear vote-winning measure.
"Our battle for IMU is a battle for liberty," Berlusconi said. "80 percent of Italian households own the properties they live in and their future security is tied to them."
In the run-up to the inconclusive February elections which lead to the coalition's formation, the PdL had promised to get rid of the tax "for 2013 and all the years to come".
Political watchers warn there are elements within Berlusconi's party pushing for him to pull the plug on the government to spark fresh elections before October, when he will be forced to begin serving his one-year sentence for tax fraud.
The 76-year-old will not go to prison because of his age, but will have to serve the time under house arrest or doing community service – which will make it more difficult for him to run an election campaign, even if he does find an heir to take his place.
Letta on Friday played down the concerns, insisting that his government was "more robust than our detractors believe".
"I'm convinced we'll find a compromise (on the tax issue), we will discuss and we will decide. But we have to tone down the bickering," he said.