ROME—Italian Prime Minister Silvio Berlusconi pledged to step down after Parliament approves austerity measures, as the euro-zone's third-largest economy tried to stave off the nightmare scenario of a bailout that would test the currency union.

The promise to resign, which came after Mr. Berlusconi lost his parliamentary majority during a routine vote on budget matters, makes Italy's controversial leader—the nation's dominant political figure for nearly two decades—one of the highest-profile casualties of the financial crisis...