Berlusconi, who said before the vote that the country would be thrown into economic and social catastrophe if his government collapsed now, won the vote 316 for and 301 against.
The result was in doubt until the last minute and even some center-right members expressed uncertainty and showed nervousness before the vote on whether the government would pull through.
The situation was so tense that some in the center-right went into last-minute horse-trading meetings with Berlusconi, who is trying to contain a rebellion in his coalition. There was even doubt until the last minute if the quorum making the vote valid existed since most of the opposition boycotted the first round of the vote.
One coalition parliamentarian, Francesco Nucara, told the chamber he was voting to save the government for the good of the country but openly expressed dissent with the way Berlusconi was running the center-right and his choice of ministers.
“You have put some people in your government who would not be worthy to be doorkeepers in some of your companies,” Nucara said in his address before the vote.
The prime minister’s administration has been plagued by scandals, economic stagnation and intense pressure from financial markets.
Berlusconi was forced to call the vote after his divided and undisciplined coalition suffered an embarrassment when it failed to pass a routine budget provision on Tuesday.
The prime minister was holding a cabinet meeting immediately after the vote to re-present the budget measure defeated on Tuesday, a result that Berlusconi wrote off as just an “accident” because some parliamentarians arrived late.
While the vote gave Berlusconi a reprieve, analysts say it will be just a matter of months only before a new crisis hits, and Italy is likely to hold elections next spring, a year early.
In a note to clients, Barclays Capital called the results: “A confidence vote that doesn’t give much confidence.”
“In many ways, this is the worst possible outcome at a time when the eurozone itself is in disarray. It will do little to stop the rot and exposes Italy and the eurozone to further uncertainty in the coming weeeks and months,” said Nicholas Spiro of Spiro Sovereign Strategy in London.
Berlusconi told parliament on Thursday the fall of his government would be “a victory for those who want to see (Italy) fall into decline, catastrophe and the kind of speculation we have seen for months in Europe and Italy.”
Several newspaper editorials on Friday highlighted the lack of new ideas in Berlusconi’s speech to parliament a day before the vote was taken, describing him as paralyzed by a fear of aggravating tensions in his coalition.
“Not one new thought was expressed. Absolutely nothing. A complete vacuum,” said Luca Ricolfi in La Stampa daily.
“Berlusconi has by now become a factor that is immobilizing and freezing Italian politics.”
A number of center-right deputies were absent from Tuesday’s vote, infuriating Berlusconi and feeding suspicions that some stayed away to raise their bargaining power in the coalition.
He is facing internal challenges from a number of ministers, most notably from Economy Minister Giulio Tremonti, who are unhappy with his leadership and the damage his personal and legal woes have done to Italy’s reputation.
The prime minister is on trial in four separate cases, accused of fraud, corruption and paying for sex with a minor.
President Giorgio Napolitano entered the fray this week, expressing deep concern about the viability of government and demanding a “credible response” to Italy’s acute problems.
A Reuters survey of about 20 analysts said on Thursday that Italy was already in recession, would barely muster any growth in 2012 and would miss the government’s fiscal deficit targets.
Its sovereign debt has been downgraded in the past month by Standard & Poor’s, Moody’s and Fitch, and since early August it has relied on the European Central Bank to buy its bonds to prevent yields rising to unsustainable levels.
