He won by a margin of three votes, following a tense session of the house and amid large protests in the capital.
Mr Berlusconi also won an earlier vote in the Senate. He had urged MPs not to jeopardise the country's stability by ousting him.
His critics argue he is too mired in personal scandal and corruption allegations to remain in office.
Berlusconi Wins Vote of Confidence
Mr Berlusconi, 74, is halfway through a five-year term but his position has been weakened by a series of scandals largely involving his relationships with women.
He has also lost the support of his closest political ally, Gianfranco Fini, along with dozens of his supporters, depriving him of his automatic majority in the lower house.
But in the final vote, two opposition deputies switched sides.
Thousands of people have gathered in Rome and Italy's other major cities to demand a change in government.
Berlusconi Wins Vote of Confidence
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