Berlusconi will have to respect a curfew and will be limited in his movements in a further humiliation for the 77-year-old, who has been expelled from parliament and is banned from running in elections for six years.
Details of the ruling were not immediately available.
Italian media earlier reported that Berlusconi's lawyers had asked for him to be allowed to do community service one day a week in a centre for disabled and elderly people near his estate outside Milan.
Berlusconi was sentenced last year in the case, which relates to the purchase of television distribution rights by his Mediaset business empire in the 1990s.
He will be spared prison time because of leniency in Italy for over-70s and the sentence could be further cut for good behaviour to nine months.
Berlusconi will also be banned from meeting other people with criminal convictions, which includes at least one of his closest associates.
There will also be some limits on his movements, although the conditions are easier than house arrest.
Under normal rules he would not be allowed to leave the borders of the Lombardy region, of which Milan is the capital, and will have to seek a special exemption if he wants to travel to Rome for political engagements.
Berlusconi is still figurehead leader of the Forza Italia (Go Italy) opposition party, Italy's main centre-right group, and is leading its campaign for European Parliament elections in May.
Berlusconi claims total innocence of any crime he has ever been charged with and regularly accuses a large part of the Italian judiciary of plotting to exclude him from politics because of an alleged leftist bias.
He is currently involved in two other court cases.
In a trial set to start on June 20th, he will appeal a seven-year prison sentence and lifetime ban from parliament for having sex with an underage 17-year-old prostitute and abusing his official powers.
He is also a defendant in a trial for allegedly paying a €3 million bribe to get a centre-left senator to join his party in 2006 in a move that helped bring down a rival government.