The European Court of Human Rights condemned Italy on Tuesday for failing to provide legal recognition to same-sex couples and said the country should introduce some form of civil union for gay couples.
Italy is the only major western European country that does not recognize either civil partnerships or allow gay or lesbian couple to marry.
The country was taken to the Strasbourg-based European Court by three same-sex couples who all complained that Italy discriminated against them because of their sexual orientation.
In their ruling, a panel of seven judges said same-sex couples in Italy needed greater legal rights.
"The Court considered that the legal protection currently available in Italy to same-sex couples ... not only failed to provide for the core needs relevant to a couple in a stable committed relationship, but it was also not sufficiently reliable," it said.
Italian Prime Minister Matteo Renzi said at the weekend his government would introduce a law on civil unions by the end of the year, convincing a junior minister to end a hunger strike he had started in early July to protest at the lack of legislation.
Draft legislation to allow for civil unions is blocked in the Senate by thousands of amendments put forward by both the opposition and one of Renzi's coalition partners.
The European Court of Human Rights was set up in 1959 and aims to protect human rights, democracy and the rule of law across the continent. It said 24 out of 47 member states of the Council of Europe rights watchdog had already legislated in favor of same-sex unions.
It ordered Italy to pay each plaintiff 5,000 euros ($5,427) in damages and up to 10,000 euros jointly to cover their costs and legal expenses.
Italy offers same-sex civil unions in a small number of municipalities but these do not provide any specific benefits, such as inheritance rights.
"There was a conflict between the social reality of the applicants, who for the most part lived their relationship openly in Italy, and the law, which gave them no official recognition," said the court.
"In the absence of marriage, the option of a civil union or registered partnership would be the most appropriate way for same-sex couples like the applicants to have their relationship legally recognized," it added.
Support for same-sex unions has risen in Italy, especially after another predominantly Roman Catholic country, Ireland, voted in May to legalize gay marriage.
Wire services
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