"Today is a first result, and it is the first time that Italy passes a universal instrument," he said.
Gentiloni added that the recent economic crisis has left 1.5 million Italian families in poverty.
The premier stated that two million Italians will receive the “inclusion income” (reddito di inclusione), which will start at up to 400 euros each month, and will increase to up to 480 euro per month depending on individual circumstances.
Gentiloni signed the memorandum of understanding with the Alliance Against Poverty (ACP) and Labour Minister Giuliano Poletti.
"There are two underlying objectives: the first identifies the criteria to determine access to the measure and establishes the amount of benefit, while the second defines the instruments necessary to create real processes of social inclusion at a local level," ACP spokesman Roberto Rossini said.
Some 4.5 million Italians were in "absolute poverty" in 2015, national statistics agency ISTAT said on Friday, adding that some 8.3 million Italians were in conditions of "relative poverty".
The government's recently approved economic blueprint, the DEF, sees 1.2 billion euros set aside this year and 1.7 billion euros in 2018 to combat poverty.
The DEF outlines three areas of intervention: the inclusion income benefit, the universal economic support for households in poverty, which will replace another system and extend its reach to 1.77 million people, and a reorganisation of the benefits.
In other economic news, a report by the Bank of Italy found that the nation's public debt fell to 2.24 trillion euros in February, dropping by 10.7 billion euros.
Italy's public debt, at more than 133 per cent of the GDP, is the second largest in GDP terms in the eurozone following Greece.
Italy's per capita GDP is 4.5 per cent lower than the EU average and 23.6 per cent lower than Germany's, ISTAT said.
The Italian economy is still struggling to generate pace and recover from the nation’s longest post-war slump.
Gentiloni’s government has passed several budget measures aimed at stoking growth.
Italy is at the top of the list in Europe for the number of young people not in education, employment or training (NEETs), at 2.2 million of Italians aged between 15 and 29.