The cabinet met symbolically in the southern city whose streets have been littered with mounds of rubbish, a product of the dysfunctional waste collection system.
Ministers named Guido Bertolaso, currently civil security chief, as junior minister in charge of resolving the rubbish problem, ANSA news agency reported. They also adopted measures aimed at opening more dump sites, the agency said.
A wide security perimeter was thrown up around the municipal building where the cabinet got down to work at around noon (1000 GMT), and about 1,000 police officers were seen deployed around the city.
Although the situation with the piles of uncollected rubbish had improved slightly in the run-up to Wednesday, with the streets in Naples' historic city centre cleaned, the outskirts were still overrun by mountains of rubbish.
"Nobody has a magic wand. The problem is serious," said Berlusconi in advance of his visit to the southern city, plagued by tens of thousands of tonnes of untreated rubbish.
"The public has huge expectations, but I will not disappoint."
The Il Sole-24 Ore newspaper earlier reported that the government would also announce a speeding-up of the process for building new incinerators, using military land as supplementary waste tips.
Berlusconi, 71, won a convincing election victory in April, making this the third time that the flamboyant media tycoon has served as prime minister after stints in April 1994-January 1995 and June 2001-2006.
His slimmed-down cabinet includes several familiar faces -- and shifts the political focus considerably to the right.
Nine demonstrations were planned in Naples, including one by an umbrella group representing immigrants, to protest against the new measures expected to be announced at the meeting to tackle crime and illegal immigration.
Tighter rules will see any convicted immigrant who is sentenced to two or more years in prison automatically expelled from Italy. Deportation is currently only mandatory for those receiving a sentence of 10 years or more.
Illegal entry will also become an aggravating factor for those found guilty of any crime, with their sentence automatically increased by a third, according to Il Sore-24 Ore.
Landlords renting premises to illegal immigrants will face up to three years in prison and a fine of 150,000 euros (234,000 dollars).
This new legal decree, effective immediately, will be backed up by a bill expected to be passed by parliament by the summer, according to Interior Minister Roberto Maroni, from the anti-immigrant Northern League party.
The new government may also announce the appointment of "special commissioners" with extra powers to deal with the issue of illegal Roma camps in Milan, Rome and Naples.
At least two travellers' camps were set ablaze last week, forcing their residents to flee, after a gypsy youth had attempted to abduct an Italian baby.
The European Commission on Tuesday strongly condemned violence against gypsies in Italy, reminding the Rome government of the obligation to uphold European law in its fight against illegal immigration.
In accordance with his election pledges, Berlusconi will also announce a series of tax measures, including the abolition of property tax on principal residences.