The Italian government has approved culture minister Giuliano Urbani's new cinema law.
Under the new law, state funding for Italian films will now only cover up to 50% of a project's budget, compared to 70-80% under the current system.
The new system, which has received widespread backing from the local film industry, is designed to encourage producers to make more market-oriented films that can attract financial partners.
Selection for state funding will now be based on a production company's credentials, rather than on the assessment of the screenplay. The change was mooted to combat criticism that the funding system was too subjective, as the state commission often rejected projects that went on to become hits at the box office and instead favoured a long list of films who failed to make any money back.
Urbani said the new funding system will be "more transparent," and while the tighter regulations will mean that fewer projects will be reviewed for state funding, "each project will be examined by the government's commission more carefully."
He added: "The new regulations will help improve the health of the film industry and will help re-evaluate the importance of the producer, without whom even the best cinema doesn't have any chance at all of being successful in Italy or abroad."