The European Commission asked the populist government to revise its budget proposals – the first time it has taken such an action - because of the country’s high national debt.

For over a month, Italy stood firm and refused to change its spending plans.

But Italian prime minister Giuseppe Conte indicated that he would present a new budget proposal later today, in the hope of avoiding a disciplinary procedure by Brussels.

He told newspaper Avvenire: “I’m preparing a proposal of mine, which the European Union cannot not take into consideration. It will arrive within hours.”

Conte added he had received some projections on the economic impact of welfare benefits and lowering the retirement age – part of the big spending plans.

“This can give me a margin for manoeuvre to spend and use in the negotiation,” he said.

One of the key concerns raised by Brussels is the 2.4% deficit target for next year, set out in the original budget plans. Italy’s debt stands at more than 130% of GDP and is the second largest in the EU, after Greece.

Conte did not detail how the government would reduce the deficit but said it “could reasonably happen”.

He insisted his proposals would not risk the interest of Italians or planned reforms, which included promises made to “end poverty” with a minimum income for the unemployed, along with tax cuts and scrapping extensions to the retirement age.

The European Union commissioner for economic affairs said the EU was waiting for “credible” moves from Italy to revise its draft 2019 budget, according to Reuters.

Pierre Moscovici told a news conference talks with Rome were proceeding but stressed that the commission was “waiting for more details”.

“We need commitments that have to be credible,” he said.

An EU disciplinary procedure against Italy may be opened as early as next month, which could include fines.