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Italian board member Massimo Segre told reporters that the deal aimed to provide 'an alternative and better proposal than the one by Nyse for Euronext'.
In a statement Deutsche Börse says it has notified the European Commission of the new proposed Euronext combination and has formally asked the EC for a merger review.
Euronext agreed a $10 billion - or EUR7.8 bn - deal from Nyse in May, ousting a rival bid by Deutsche Börse. Euronext shareholders are due to vote on the proposed takeover in December.
However Deutsche Börse has been trying for months to woo Euronext away from the trans-Atlantic merger and a deal with Borsa Italiana could persuade Euronext to join a federation of European exchanges rather than pursue a tie-up with Nyse.
The Italian and German stock exchange operators are expected to sign a more binding and detailed agreement within the coming weeks.
News of the Borsa Italiana/Deutsche Börse follows remarks made by French President Jacques Chirac who has reaffirmed his support for a 'European solution' for Euronext. Speaking at a joint news conference with German Chancellor Angela Merkel, Chirac said he supported a report by Paris Europlace, a lobby group of the biggest French firms, which called for Euronext to pursue mergers with rival exchanges in Germany and Italy as well as the US.
The report, which was compiled by French industrialist Henri Lachmann, calls for Deutsche Börse to sell its cash equity business to Euronext in return for a minority stake - around 15-20% - in the pan-European exchange.
Euronext should still complete its agreed merger with the Nyse but only after it has acquired the German equity market and merged with Borsa Italiana, says the Lachmann report.
In a statement Euronext says it welcomes the proposal that it acquire the German equity market and Borsa Italiana, but only as part of Euronext's merger with Nyse and not in place of it.
'This addition to the Euronext Nyse combination is suggested with the full support of Nyse,' says the statement.
But it a separate statement Deutsche Börse says it would not consider selling its cash equity operation to a combined Nyse/Euronext entity, adding that its current proposal for Euronext 'foresees a model for the combination of European cash markets led out of Paris'.