"I've called a meeting of the cabinet to declare a national day of mourning on Friday for the victims of the terrible Lampedusa tragedy," Letta wrote on the microblogging website Twitter.
Rome's city council held a minute's silence Thursday in a mark of respect for the victims of Thursday's shipwreck, which are feared to be nearly 300.
The boat - which was reportedly from Libya - was believed to be carrying more than 500 migrants, mainly from Eritrea and Somalia, when it caught fire and sank off Lampedusa.
Around 120 people were rescued and more than 100 bodies brought to shore including those of women and several children. Many more migrants were still missing as coastguard and frogmen searched for corpses.
Italian politicians of all stripes expressed sorrow at the loss of life.
The shipwreck drew condemnation from Pope Francis and from charities including Amnesty and Save the Children, who urged Italy and the European Union to step up efforts patrol their coasts and rescue migrants.
Top EU officials admitted more needed to be done to protect migrants heading to Europe by sea.
Regional Politics Commissioner Johannes Hahn said the bloc needed to look at ways of helping Italy, which is the main arrival point for the people-smuggling boats.
Home Affairs Commissioner Cecilia Malmstroem urged effective global cooperation to protect migrants and increase legal immigration to Europe.