Basically you have to apply to your local consulate in Melbourne for a working holiday visa.
Then when you enter Italy you have 8 days to go to the Questura (one of the police forces in Italy) and apply for your Permesso di Soggiorno (basically "permission to stay") - this will take a while, I never got mine and I was there for 12 months! ... you only need to keep the receipt from the Questura and you will be fine
Then you can find a job and the employer has to apply for a work permit for you.
I was in Bolzano which is in one of the valleys in the mountains. Absolutely beautiful place. I know a few people if you need somewhere to stay ;)
If you do go there. Pop into Temple Bar and say hello to Steve and Tanya and grab a Guiness while you are there. :) almost 8 years ago