Thousands of striking workers from Italy's largest labour union marched through the streets of Rome on Friday to protest against Prime Minister Silvio Berlusconi's economic policies to tackle a deepening recession.

The strike came as finance ministers from the G7 industrialised powers gathered in Rome for the start of two days of meetings addressing the global financial crisis.

"Didn't (Berlusconi) say that Italy wouldn't be hit by the crisis," shouted one union member, addressing the crowds from a stage at St. John's Square.

Organisers said the eight-hour protest drew a crowd of 700,000 people, including strikers and supporters. Metalworkers and public sector workers led the strike, calling for better contracts and tax hikes on the rich to provide aid for those affected by the crisis.

Many protesters were concerned about their job security.

"If people don't have a strong contract and are losing their jobs - how can you hope to relaunch the economy? It is a huge swindle," said union member Silvio Marconi.

Italy's centre-right government criticised the union for striking at time when the economy was fragile.

"At this point, we believe that it's a mistake to interrupt productive activities," said Labour Minister Maurizio Sacconi, calling on unions "to reflect".

Data released on Friday showed Italy saw its sharpest economic downturn since at least 1980 in the fourth quarter of last year, shrinking a quarterly 1.8 percent.

That outpaced a record 1.5 percent contraction for the entire euro zone during the period.