ROME, Dec 23 (Reuters) - Prime Minister Enrico Letta promised on Monday to include a swift reform of Italy's widely criticised electoral law and cuts to bureaucracy and taxes in a new coalition pact to be worked out in January.
Letta, who is 47, said that 2014 would be a year in which a new generation of leaders would be able to begin reforms to pull Italy out of two decades of stagnation.
"I have been part of this change and I feel the full weight of responsibility. This generation will have the opportunity of changing Italy and I am convinced it can do it."
He dismissed suggestions that his authority could be undermined by the election of Matteo Renzi as head of his centre-left Democratic Party (PD), saying the 38-year-old Renzi's arrival was part of an "unprecedented" generational change in Italian politics.
"This new generation will play a team game in a different way," he said.
Letta's comments came shortly before the Senate was due to complete parliamentary approval for the 2014 budget after it cleared the lower house on Friday.
Letta said a new pact for his coalition government to be worked out in detail in January would address a series of issues ranging from cutting taxes that deter companies from hiring to easing citizenship laws for the children of immigrants.
An overhaul of the current electoral law and a parliamentary system that makes it difficult for any party to win a stable governing majority will be reformed before European parliamentary elections in May, he said.
Letta's coalition, built around the PD and a smaller centre-right group led by Interior Minister Angelino Alfano, has promised to push ahead with reforms to boost growth in 2014 and says it is more cohesive since a break with Silvio Berlusconi, who pulled out of the government last month.
However data on Monday, which showed a sharp drop in consumer confidence for December, underlined the deep crisis facing Italy as it struggles to emerge from a crisis which has cut economic output by more than 9 percent since 2007.
The election of Renzi, the mayor of Florence who has made no secret of his ambition to become the next prime minister, has added an uncertain new element to the mix.
Renzi has pressed the government to move more quickly on issues ranging from electoral reform to overhauling employment laws opening the way for a delicate phase of negotiations in the coming weeks as the parties work out a formal coalition pact.
Reforming citizenship laws to make it easier for children of immigrants to take Italian nationality, a measure strongly opposed by the centre-right, will be particularly complicated but Letta said a change would send an important signal.
(Reporting By James Mackenzie and Steve Scherer Editing by Jeremy Gaunt)