Mr Berlusconi will have to navigate Italy through tough economic reforms
Centre-right leader Silvio Berlusconi says tackling Naples' rubbish crisis and rescuing troubled airline Alitalia will be among his top priorities.
Mr Berlusconi's bloc won solid majorities in both the Senate and lower house in the early general election.
"I will be in Naples three days a week" to solve the rubbish crisis, he said on Tuesday. Piles of stinking rubbish have been littering the city for months.
Mr Berlusconi, 71, is embarking on his third term as prime minister.
The billionaire media mogul has warned of "difficult months ahead" and has vowed to work with the centre-left opposition to pass much-needed economic reforms. He was congratulated by defeated rival Walter Veltroni.
The polls were held three years ahead of schedule following the collapse of Romano Prodi's centre-left coalition. Mr Berlusconi will head Italy's 62nd government since World War II.
In a radio interview on Tuesday, Mr Berlusconi said he planned to announce his government line-up within a week. He heads the new People of Freedom party (PDL).
He will govern with the anti-immigrant Northern League, which wants extensive autonomy for Italy's regions and nearly doubled its vote.
Mr Berlusconi said he would hold his first cabinet meeting in Naples and would stay there three days a week. "I will leave only when I'm sure I've found a definitive solution" to the rubbish crisis, he said.
Municipal rubbish collections ended in December and the city's landfill sites are overflowing.
On Alitalia, Mr Berlusconi said: "I'll get a grip on the situation, doing everything necessary so that the flagship company operates and remains at the service of tourism and of the Italian economy".
He has pledged to save the struggling airline for Italians, challenging a proposed takeover by Air France-KLM.
On Thursday he is due to hold talks with Russia's President Vladimir Putin in Sardinia.
With virtually all of the votes counted, the interior ministry said Mr Berlusconi's bloc had taken 47% of the vote, compared with 38% for Mr Veltroni's centre-left, in both the Senate and the lower Chamber of Deputies.
That translates into a 101-seat lead in the Chamber, and a 38-seat advantage in the Senate.
The results have reshaped Italian politics, says the BBC's Jonny Dymond in Rome, slashing the number of parties winning representation in the chamber from 26 to as few as six.
But, our correspondent adds, Mr Berlusconi will still need to do difficult deals with potential partners.
Mr Berlusconi said his slimmed-down cabinet would have 12 ministers, including four women.
His government faces the task of reviving Italy's ailing economy, with zero growth forecast for the coming year.
Although Italy is saddled with a massive public debt, he has promised tax cuts and handouts to voters.
Italy's economy has been suffering from low productivity and a strong euro, and analysts say young people, pensioners and low-income workers are feeling the pressure.
Some 158 different parties contested the regional and national polls.
At 80%, the final turnout appears to have been lower than in the last election two years ago.
Mr Berlusconi has served two previous terms as prime minister, last resigning in May 2006 after losing a bitterly contested election.
One of Italy's richest men, he is the head of a business empire that spans media, advertising, insurance, food and construction, and includes the top flight football club AC Milan.