A bill to reduce the sentences of 12,000 prisoners has sparked a row in Italy's ruling coalition.
Mr Prodi's government has only a slim majority
On Thursday the lower house of parliament approved the measure to ease overcrowding in prisons.
But Infrastructure Minister Antonio Di Pietro, a former prosecutor, objected to the government extending the pardon to white-collar criminals.
Meanwhile, Justice Minister Clemente Mastella has threatened to resign if the bill does not become law.
The bill is expected to be voted into law by the Senate (upper house) on Saturday.
Overcrowding is a long-standing problem in Italy's prisons. They were built to accommodate about 40,000 inmates but are currently holding more than 60,000.
The late Pope John Paul II visited parliament in 2002 to urge the lawmakers to grant clemency to prisoners.
In order to pass the bill, the ruling coalition of Prime Minister Romano Prodi needed the support of the opposition, which insisted on including those guilty of corruption and fraud in the amnesty.
This prompted Mr Di Pietro - a leading magistrate in the "Clean Hands" anti-corruption campaign in the 1990s - to accuse the government of "yielding to blackmail".
The pardon excludes rapists, mafiosi, terrorists, paedophiles and child traffickers, but many other prisoners' sentences are set to be cut by three years.
Mr Prodi's coalition ousted Silvio Berlusconi's government in the election in April by a very small margin.