"We must ask the municipalities to apply our directive and make migrants work for free... Rather than leave them with nothing to do, they should make them work," Angelino Alfano said, according to the Italian media.
The statement came amid rising tensions in Italy over a massive influx of migrants and people fleeing war, who risked their lives and paid exorbitant sums to smugglers to sail on rickety, overcrowded boats across the Mediterranean to the Italian coast.
While the deaths of thousands of migrants at sea have raised a global outcry, many in Italy feel they have shouldered enough of the burden, and the government has repeatedly called for more EU help.
The interior ministry's civil and immigration rights chief Mario Morcone said asylum seekers working for "the public good", for example on environmental projects, would only need their insurance covered.
"The idea is to create a better rapport, and more acceptance" in society, Morcone said on television.
Migrants who are not seeking asylum tend to quickly leave the reception centres where they are housed on arrival, using clandestine routes to travel to other European countries where they have relatives or better work prospects.
As such, the ministry's decision refers to asylum seekers, whose claims can take up to two years to be processed.
Until they are recognized as refugees, asylum seekers do not have the right to work in Italy.
More than 9,000 new migrants have arrived in Italy in the past week. They add to 84,000 people already living in the reception centres, Morcone told a parliamentary commission.
On Wednesday, the northwestern region of Val d'Aoste became the first in Italy to refuse to welcome more migrants.