"I will never ask someone to resign for a notice of investigation but anyone who is convicted must leave political life for good," Prime Minister Matteo Renzi said at a seminar in Genoa on Saturday.
He was responding to questions about the position of Giuseppe Castiglione, a junior agriculture minister, who has been placed under investigation in relation to suspected bid-rigging of contracts for a huge migrant centre in Sicily.
The notice was issued by prosecutors on Friday in the latest development in a major investigation into a network of corrupt businessmen and politicians known as Mafia Capitale because the municipal council in Rome was the main target for their attempts to skim off public funds.
Cash allocated to feed and temporarily house asylum-seekers and other migrants was their most reliable source of funds with one of the key figures in the scam having been recorded telling an associate it was more lucrative than drugs.
The case has embarrassed Renzi because his centre left Democratic Party (PD) currently runs the Rome city hall. It also gives the opposition another stick with which to beat the government over the problems generated by the arrival on Italy's southern shores of thousands of migrants every week.
Renzi defended Rome mayor Ignazio Marino, saying that he could not be held responsible for a corrupt system which was already well-established by the time he took the mayor's role in 2013.
"Could we have done more? Yes. Could we have realized what was happening sooner? Yes. But now we are doing something about it," Renzi said.
"Marino is not part of this criminal clique."
The alleged mafia network operating in Rome and the surrounding area appears to have been a much looser network than Italy's established organized crime syndicates such as Sicily's Cosa Nostra.
But by classifying it as a mafia group, prosecutors gain greater powers to seize assets and use wiretaps, both tactics which have been key to the investigation.
The alleged ring leader of the criminal gang, notorious one-yed underworld figure Massimo Carminati, was arrested in December.
The UN's refugee agency this week described the growing evidence of organised crime's involvement in Italy's asylum and immigration system as "despicable" and "extremely worrying".