Prime Minister Giorgia Meloni's government had already said it would no longer be possible for people considered fit for work to claim the citizenship wage by the end of the year, saying it is too susceptible to fraud and takes away the incentive for beneficiaries to find a job.
People who are not fit for work will be able to claim a new benefit called MIA (Misura di Inclusione Sociale, Social Inclusion Measure), the draft bill said.
The new benefit will be split into a system for households with people over-60, minors or those with a disability and another for families that do not have members in any of those groups.
The 'citizenship wage' was brought in under the first government of ex-premier and 5-Star Movement (M5S) leader Giuseppe Conte in January 2019.
The M5S has said its abolition will spark a "social bomb" of countless newly impoverished people who have nowhere else to turn to support themselves.
ANSA