After weeks of debate a total of 365 MPs voted in favour of the new law, with 156 against the proposal and 40 lawmakers abstaining.
Approval of the law comes less than two days after politicians rejected part of the bill which called for quotas for female MPs, allowing it to go to a final vote.
The new electoral law was drawn up by Renzi at the start of the year, after an Italian court ruled the current legislation was unconstitutional.
While politicians have long since agreed the law needed to be overhauled, even nicknaming it the “pigsty” law, the court’s decision in December spurred them into swift action.
The law drawn up by the prime minister aims to avoid a repeat of last year’s political stalemate, when three parties each won a quarter of the national vote and failed for two months to form a government.
The bill approved in Italy’s lower house on Wednesday now needs to be passed by the Senate before it can become law.