The wealthy Lombardy region, of which Milan is the capital, has announced it is making 5 million euro of public funds available for the initiative.
The money will be paid in 250 euro installments over 18 months to women who can prove they are financially insufficient, with an annual income of below 23,000 euro and with other children to support.
Regional president Roberto Formigoni announced the project , saying: 'No women need to abort now in Lombardy for financial reasons.
'We want to help families, maternity and birth removing any possible obstacles starting with economic problems, which make it difficult to choose in favour of life.'
Abortion was made legal in Italy in 1978.
Mr Formigoni is a member of the ruling Prime Minister Silvio Berlusconi's People of Freedom party and is a devout Roman Catholic. He has campaigned against the introduction of the abortion pill, RU486.
The Roman Catholic Church is against contraception and abortion and yesterday a spokesman for the Italian Bishops Conference said: 'Anything that respects life is to be applauded.'
A Vatican spokesman declined to comment directly but privately officials in the Holy See also said they were in favour of the Lombardy scheme as it would 'save lives'.
However, there was criticism on some Italian news websites with many saying: 'A baby is for longer than 18 months - what happens when the cheques stop?
Others questioned whether women would be encouraged to have babies as a way of getting an extra 250 euro a month.
One critic said: 'If all pregnant women in Lombardy with financial difficulties decide to keep their children their babies, the money will run out in three months.'
Latest available figures reveal that on average around 130,000 pregnancies are teminated every year in Italy.
SIC: DMUK