Prime Minister Silvio Berlusconi's government, engulfed in a graft scandal over state contracts, drafted a law on Friday to crack down on corruption, but the opposition criticised the move as an electoral ploy.

Berlusconi, who is himself on trial for corruption and tax fraud in two separate cases, announced the surprise package of measures this week as his government struggled to quash a scandal surrounding contracts awarded by the civil protection agency.

With regional elections looming on March 28-29, the controversy threatens to dent the conservative leader's hopes for a sweeping victory against a divided centre-left opposition , buffeted by sex scandals in recent months.

"We have approved the concept of an increase in penalties for crimes against the public sector," said Defence Minister Ignazio La Russa after the weekly cabinet meeting.

"The decree has been discussed and essentially approved," he said, adding however that more discussion was needed on aspects related to the prevention of corruption.

Another minister, Roberto Calderoli, said a revised text would be examined at next week's cabinet meeting.

However, the head of the opposition UDC party, Pier Ferdinando Casini, said the legislation would probably end up being quietly dropped like other populist legislative measures announced by Berlusconi's two-year-old government.

"I am very afraid that the fight against corruption is ... the latest bit of electoral publicity," Casini said. "There are simply too many people who are stealing and that must be stopped because the credibility of parties and politics itself is being called in to question."

A report by Italy's state auditor published on Wednesday found corruption was rising dramatically and legal sanctions were no longer a sufficient deterrent. The Rome-based Audit Court said cases of corruption surged by 229 percent last year from 2008.

A flurry of scandals have prompted comparisons with the early 1990s "Bribesville" investigation which wiped out an entire generation of Italian politicians.

For the past week, magistrates investigating lucrative public works contracts have closed in on Guido Bertolaso, head of the civil protection department and Berlusconi's right-hand man in dealing with natural disasters.

Bertolaso, a former hospital operator in war zones, has denied any wrongdoing. However, the scandal is seen as costly for Berlusconi ahead of the vote. Opposition parties control 11 of the 13 regions coming up for grabs in the elections and, before the graft scandal broke, most analysts expected them to lose at least five of them.

Reuters