In a report on environmental policies across the EU, the commission criticized Italy's "persistent problems" in waste water treatment, particularly in the south of the country.
Italy was also lambasted for high levels of air pollution and smog in the north, having been warned last week it could face a fine of up to €1 billion for exceeding safe limits of fine particles. In the first month of the year, nine Italian towns were over the limit on at least half of the days.
Cremona in Lombardy was the worst offender, while big cities including Rome, Turin and Naples introduced partial traffic blocks in an effort to mitigate the smog.
Environmental organization Legambiente held protests outside city halls, with banners reading 'Our lungs are breaking'. The organization also presented a dossier including a ten-point plan to help cities overcome the pollution, including improving public transport and creating more green spaces.
Another issue flagged up in the report was waste management in general. While recent years have seen an increase in the proportion of waste material being recycled or composted, its overflowing landfill sites are a problem - here again, the southern regions bear the brunt of the burden.
"Italy could introduce a national tax on landfills or harmonize its regional taxes to reduce landfill waste," the report suggested, adding that there were significant regional variations in both waste and water management.
Non-compliance with high EU environmental standards has already drained tens of millions from the state coffers in fines for illegal landfill sites, including fines worth a total of €85 million for the ongoing waste crisis in Campania.
Years of toxic waste dumping for profit by mafia groups have caused parts of the region to be dubbed the 'Land of Fires'.
Mafia infiltration of public waste disposal is widespread, and the area contains large stockpiles of historic waste known as 'ecobales', which the EU estimates could take 15 years to clear.
The so-called Land of Fires gets its name from the high number of uncontrolled fires that break out in the area due to uncontrolled dumping. Last year, firefighters extinguished 2,531 across the area.
But it's not just flames that are the problem. Pollution caused by toxic waste dumping has also lead to levels of cancer in the area being way above the national average.