The preliminary estimate by the national statistical agency ISTAT was much steeper than expected for the eurozone's third largest economy.
A Dow Jones Newswires consensus had forecast a 0.2 per cent contraction for the period.
The recession is the first in Italy in four years.
Third-quarter performance was down 0.9 per cent compared with the third quarter of 2007, against a forecast of 0.3 per cent.
ISTAT is to confirm the figures on December 10.
The government in September - before the full extent of the world financial crisis became apparent - officially forecast growth of 0.1 per cent this year and 0.5 per cent in 2009.
The International Monetary Fund was much more pessimistic, predicting that GDP would shrink 0.2 per cent in 2008 and 0.6 per cent next year.
The European Union, for its part, has forecast zero growth for both years.
Recession fears deepened on Monday with figures showing industrial output slumped 2.1 per cent in September from August, the biggest single-month drop since December 1998.
It was 5.7 per cent less than a year earlier and down 2.3 per cent for the first nine months of 2008, ISTAT said. -- AFP