Thousands of prisoners will be released from prisons across Italy to ease overcrowding and save the cash-strapped country millions of euros. However, the released prisoners will have to serve the rest of their term under house arrest.

Italy's new justice minister Paola Severino plans to free around 3,300 prisoners with up to 18 months remaining in their sentence.

According to the government, the money to be saved was needed for the world's fourth-most indebted country led by a new government to restart the ailing economy.

The plan reportedly will save Italy 380,000 euros (around $493,000) a day.

It will make more room for the 68,000 inmates locked up in the country's 206 jails, the Corriere della Sera newspaper reported.

In 2010, former prime minister Silvo Berlusoni's government allowed 4,000 prisoners with no more than 12 months left on their sentence, to serve out the time at home.

The ministry of justice and pardon usually lets non-violent offenders out of prison early. Convicts sentenced to less than three years are often given house arrest.