The education ministry is to raise the compulsory school-leaving age to 18 - but will allow 15 to 18-year-olds to spend part of their final three years in work placements or serving apprenticeships.
Under the proposals schools will arrange placements with employers for older teenagers, and take work experience into account when making final assessments. Pupils will be assigned tutors to supervise them at school and at work.
The proposal to raise the leaving age from 14 to 18 was originally made by the previous centre-left government in 1999. But when Silvio Berlusconi's centre-right government came into power in 2001, it had been raised only by one year, to 15.
This brought Italy into line with European neighbours, but was a messy compromise.
Fifteen comes at the end of the first year of upper secondary and does not coincide with any state exam. So first-year upper secondary classes are swollen by ranks of pupils who leave at the end of the year without any qualification.
Also, upper secondary students pay fees. Even though compulsory education should be free, these fees were not waived for first-year students.
The new decree addresses both problems. The leaving age will coincide with the state exam, taken at 18; and fees will be waived in phases as the new cohort passes through each year of upper secondary.
But critics have attacked the reform for lack of detail, describing it as "nebulous".
Enrico Panini, general secretary of the main teacher's union CGIL Scuola, said: "The minister has told us nothing about how many hours can be spent on work experience, nor how contracts will be stipulated with the private sector."
Teachers are also worried about what will happen to technical and vocational schools which have previously prepared students for the world of work.
Under the new plans they are upgraded to the status of liceo (academic high school), but are destined to lose their role of providing hands-on experience.