At least 50 people including five children were killed in a large earthquake that hit the city of L'Aquila and neighbouring towns east of Rome early Monday, Interior Minister Roberto Maroni said.
He said the thousands of people left homeless would be accommodated in hotels or temporary structures that were being put up.
The 5.8 magnitude quake injured thousands and left many more trapped in the rubble.
''It's the worst tragedy since the start of the millennium,'' said Civil Protection chief Guido Bertolaso who is leading a huge rescue operation.
Survivors were digging through the rubble, some with their bare hands, in five areas of the city where buildings had collapses ''like cardboard,'' eye witnesses said.
As Pope Benedict XVI prayed for the victims, especially the children, Premier Silvio Berlusconi cancelled a visit to Moscow to rush to the scene and several countries offered aid.
A cabinet meeting has been set for 19.00 Italian time (17:00 GMT).
Scenes of the disaster opened news bulletins and hit websites worldwide, with pictures of the dead in streets and the frantic rescue efforts.
The quake, which hit at 3:30 a.m. (01:30 GMT), had its epicentre just outside L'Aquila, a medieval city with 68,000 inhabitants 100 km (60 miles) east of Rome.
It was felt as far away as Rome where people were woken up as buildings shook.
At least 26 towns and villages were hit by the tremor in and around L'Aquila, the capital of the mountainous Abruzzo region.
It was the worst quake in size since 1997 when ten people were killed and massive damage done in and around Assisi.
The toll was the worst since 2002 when 20 died in a school near Naples.
Several countries and the European Union offered Italy aid.
