The Italian news agency ANSA reported President Giorgio Napolitano said in a statement released by his office that Berlusconi understood the implications of the budget vote and would resign once the economic reforms demanded by European leaders are in place.
Parliament is expected to take up the reform measures next week, ANSA said.
The ruling coalition group, led by Berlusconi, came up seven votes shy of a majority with just 308 out of 630 possible votes in the lower house in Rome. The budget bill, however, passed, because 321 legislators abstained, The Wall Street Journal reported.
"It's clear that the government no longer has a majority," opposition leader Pier Luigi Bersani said.
Before the vote, Umberto Bossi, representing critical support for the prime minister in the past, and Bersani asked Berlusconi to resign, The New York Times reported.
"Let the president find a solution, we will do our part," Bersani said.
Italy has become the epicenter of the eurozone's debt crisis. It is not only the latest country to emerge with an unsustainable debt burden, but the largest.
"We all know that Italy runs the real risk of not being able to access the financial markets in the next few days," Bersani was quoted by the Times as saying.
Greece, Ireland and Portugal have already required international bailout loans to keep their budgets from going into default. Italy, however, after Germany and France, has the third largest economy in Europe.
Italian bonds and shares have been under fire after the Italian government promised last month to approve reforms to cut the debt and enhance growth after passing a $74.5 billion austerity package in September.
Italy's debt stands are $2.6 trillion, 120 percent of its gross domestic product, with zero projected growth.
Berlusconi, People of Freedom Party leaders and coalition partner Northern League have maintained early elections will be necessary if the government falls.
Celebrity Families of 2014 [PHOTOS]