The decision not to "apply the anti-terrorism law was the fruit of Italian firmness", Italian Premier Matteo Renzi said after chairing a meeting of a task force on the marines. (Agencies)
Italy would continue to push to have the case assessed by international bodies, Renzi said.
Earlier in the day in New Delhi, Indian authorities, in a reversal, told the country's Supreme Court that marines Massimiliano Latorre and Salvatore Girone accused of killing two Indian fishermen off Kerala coast in 2012 will not be prosecuted under the SUA law which carries the death penalty.
Previously, India had ruled out a death penalty but said it would still try the marines under the SUA law.
The Italian Cabinet's task force on the issue, in a separate statement, on Monday said hard work by the Italian government helped convince India to soften its stance.
"Today's decision of the Supreme Court in New Delhi to renounce use of the counter-terrorism law is the result of strong Italian opposition," the statement said.
Earlier this month, Italy had petitioned the UN over the trial of the marines under the SUA law. However, UN Secretary General Ban Ki-moon asked Rome to resolve the issue bilaterally.
Last week, Italy recalled its envoy to India to protest delays in filing charges against the two naval personnel. Rome also summoned the Indian ambassador to express its concern.
Italy had said use of the terror law equates it with being a terrorist state.
The marines, deployed on the Italian-flagged oil tanker MT Enrica Lexie, shot dead two fishermen whom they believed to be pirates, sparking diplomatic tensions between the two countries.
They are now staying in the Italian Embassy in New Delhi awaiting trial.
Rome wants the marines to be tried in Italy, claiming the incident took place in international waters. However, New Delhi says it has the right to try the Italians as the victims were Indians on board an Indian fishing boat.
INDIA SHOULD RESPECT INTERNATIONAL LAW
Meanwhile, European Parliament Speaker Martin Schulz on Monday asked India to respect international law in the marines case.
India should "fully and promptly" uphold laws and "especially" the UN Law of the Sea Convention, Schulz told the Members of the European Parliament. "I share Italy's concerns on the longueurs and delays in the case."
The EU and NATO had said the case could have implications on the global fight against piracy.
The decision not to "apply the anti-terrorism law was the fruit of Italian firmness", Italian Premier Matteo Renzi said after chairing a meeting of a task force on the marines.