The comments, in an interview with Reuters Television on the sidelines of the World Economic Forum meeting in Davos, represent a softening of the ambitions expressed by Prime Minister Enrico Letta, who said in November that privatisation revenues could come to 10-12 billion euros in 2014 alone.

An official target presented in budget documents in September said the government would aim to raise the equivalent of half a percentage point of gross domestic product - roughly 7.5 billion euros a year - from privatisations.

Saccomanni, a former Bank of Italy official who joined Letta's left-right coalition government after deadlocked elections last year, said most of the revenue would come this year.

But the operation, involving the sale of stakes in state-controlled companies ranging from the Poste Italiane postal service to air traffic control operator ENAV, would not be fully completed until 2015.

"We plan to start now and we expect to have significant results in 2014 but the process will go over until next year," he said. "We expect something on the order of 8-10 billion for the whole of the privatisation programme," he said, adding that his estimate was a conservative one.

Pressure on Italy's borrowing costs have eased considerably since 2011, when fears over the sustainability of its public finances raised the risk of a default which could have broken the euro zone apart.

But it badly needs the revenue from the sale of state-owned assets to rein in a public debt expected to come in just below 133 percent of gross domestic product this year, the second-highest level in the euro zone behind Greece.

He said one of the centrepieces of the privatisation programme, the planned sale of a 40 percent stake in Poste Italiane, due to be approved in cabinet on Friday, could raise 4-5 billion euros and further stakes may be sold subsequently.

"After this initial offering there could be more," he said, adding that he hoped the sale would attract interest from private investors in Italy, who have traditionally favoured putting their savings into bonds rather than shares.

"We expect this company to be well-received by the market also because the post office is present in every village in Italy. It's a transaction that will not remain in financial circles alone," he said.

Saccomanni said the government was also looking at reducing its stake in energy group Eni (>> Eni SpA) below the strategically important 30 percent level.

"We are studying, discussing going below this threshold, but it's not for the immediate period," he said without elaborating.

Eni is currently involved in a complex share buyback operation aimed at retaining state control over one of Italy's most important companies after Letta announced plans last year to sell a 3 percent stake in the group.

The Treasury holds 4.34 percent of Eni and state lender Cassa Depositi e Prestiti holds another 25.76 percent, bringing the state's total holding to 30.1 percent.

If that stake grew, stock exchange rules would force the government to make a takeover bid, while a smaller holding would bring the government lower dividends. ($1 = 0.7310 euros)

(Writing by James Mackenzie; Editing by Hugh Lawson)

By Alessandra Galloni

Stocks treated in this article : Banca Monte dei Paschi di Siena SpA, Eni SpA