The measures would potentially open the way for the government to end the concession held by Atlantia, whose subsidiary Autostrade per l'Italia (ASPI) was the operator of a bridge that collapsed in Genoa last year, killing 43 people.

Atlantia, which is controlled by the Benetton family, has always denied wrongdoing over the Genoa disaster and said it spent more on maintenance of the motorway network than required by its contract.

At the end of a late night meeting on Monday, the ruling coalition signed off on a rule that considerably reduces the amount the government must pay to a toll road company if a concession is revoked due to shortcomings on the part of the operator.

The rule, which is part of a broader decree, also states that state-owned road company ANAS will temporarily manage the motorways if an operator has its concession revoked.

In an interview with daily Il Messaggero on Tuesday, Prime Minister Giuseppe Conte said the new rule eliminates an unfair advantage for Atlantia, adding that a decision on the revocation of the concession would be taken in January.

"There is no alarm for the concessions sector: those who have made investments, even in the event of contract breach, will be able to recover the amounts for the costs incurred," Conte said.

"However, it will no longer be possible to apply favourable rules such as those invoked by Atlantia, which even in the event of a serious breach would involve a compensation of tens of billions (of euros)... I will not allow it."

The ruling 5-Star Movement has repeatedly called for the company to be stripped of its concession. More than 70 former and current employees of Atlantia and its subsidiaries are under investigation in relation to the Genoa disaster.

Within the coalition, the centre-left Democratic Party (PD)also backs the new rule, but the small centrist Italia Viva party, led by former Prime Minister Matteo Renzi, continues to oppose it, saying it would scare away foreign investors.

Italia Viva's votes are needed to maintain the government's parliamentary majority, so it remains to be seen whether the rule will be passed when the decree is due to be approved in both houses early next year.

The coalition is also divided over whether to end Atlantia's contract outright.

A PD minister, speaking on condition of anonymity, told Reuters the decree was intended to force Autostrade to accept a revision of the concession, which expires in 2038.

Proceeds from the concession account for around one third of Atlantia's core profits and guarantee several billions of debt issued by ASPI.

A source close to ASPI warned the company would go bankrupt if the government revoked its concession without compensation.

ASPI said in a statement on Sunday the new rule risked being in breach of the Italian constitution if it results in unilaterally revoking a contract by one of the parties involved. The company said it might take legal steps to protect itself and warned it could seek multi-billion-euro compensation from the state.

(additional reporting Stefano Bernabei; editing by Gavin Jones and Jane Merriman)

By Giuseppe Fonte and Francesca Landini