In an interview on Canale 5 television on Sunday, Renzi said that families with a newborn child will receive the monthly bonus until their child is three years old.
The “baby bonus” measure, which will take effect from January 1st 2015, comes alongside plans to give low-income families a €80 a month tax-break.
“We will give €80 not only to those earning less than €1,500 a month, but also to all mothers who have a child, for the first three years. It means half a billion will go to families," he said.
Last week Italy's cabinet approved a 2015 budget, which unveiled plans to increase borrowing to slash taxes by €18 billion.
Some €10 billion would go towards extending a tax cut for low earners announced earlier this year, while €500 million would go towards helping families.
The tax cut is "the biggest ever done in the history of the Italian Republic", Renzi said.
Italy’s birth rate meanwhile hit a record low in 2013, with 515,000 babies being born – a drop of 64,000 over the past five years, according to the annual country assessment report published in May by Istat, the national statistics agency.
The agency said there were 12,000 fewer births in 2013 than in 1995, when the previous low record was set.