The immigrants, including 124 women and 29 minors, were picked up from two boats attempting the perilous journey across the Mediterranean from north Africa after being spotted by patrol helicopters.
The draft law passed by Italy's lower parliament decriminalizes undocumented immigration, except in cases where a person expelled by the government returns illegally to the country.
The bill, which must go before Rome's Senate before it becomes law, is part of a government drive to reduce prison overcrowding.
Italy's Centres for Identification and Expulsion (CIEs) detention facilities have come under criticism for the conditions in which immigrants are kept and the long periods they are held there.
Last year the European Court of Human Rights ruled that overcrowding violates the basic rights of inmates in Italy's jails.
Thousands of migrants arrive on Italy's shores from north Africa every year, despite government attempts to clamp down on boat arrivals after hundreds drowned in two shipwrecks late last year.
Last month, close to 4,500 migrants were rescued over three days, according to the International Organisation of Migration.
The latest arrivals were picked up by the landing platform dock San Giorgio and patrol ship Vega and were being transported to Porto Empedocle on the coast of the Strait of Sicily, the navy said in a statement.
"The rescues were necessary due to the overcrowding of the boats that compromised their buoyancy," it said.
Italy began its operation "Mare Nostrum" ("Our Sea") - a Latin reference to the Mediterranean - after more than 400 migrants from Eritrea and Syria perished in twin tragedies in October 2013.
Immigration charities estimate that between 17,000 and 20,000 migrants have died at sea trying to reach Europe over the past 20 years.