The plan that the government's economic development minister labelled a "digital revolution" aims to boost broadband access by 2020 in compliance with European Union objectives.
A report published last year by the US consultancy Akamai found that Italy came 48th among countries in Europe, the Middle East and Africa regions in terms of Internet speed and labelled it the slowest in the European Union.
Under EU objectives, all citizens would have access to an Internet network with a capacity of 30 megabits per second by 2020, while at least half of households would have access to 100-megabit networks.
Economic Development Minister Federica Guidi said it was possible to have 85 percent of households covered by that year.
Ahead of the announcement, the government's plans had provoked concern from Telecom Italia over whether a deadline would be set to replace its copper network with fibre, a process expected to cost billions of euros.
Any plans for such a deadline however appear to have been put aside for now.
Vodafone Italia chief Aldo Biso told La Repubblica newspaper on Tuesday that the country urgently needed to modernize its network.
He said Italy was ranked 51st in average broadband connection speed at 5.5 megabits per second, while Romania, for example, was ranked 16th with 11.3 megabits per second.
"This is the first government that has the courage to set its ambitions so high," Biso said.