Italy Poverty Levels Soar As Recession Rages On: Study

* Recession has lasted almost two years

* 8.6 mln live in seriously deprived families -ISTAT

ROME, May 22 (Reuters) - Millions of Italians cannot afford to heat their homes properly or eat meat as their country is racked by recession and soaring unemployment, said a report which found the number of people considered seriously deprived had doubled in the past two years.

The findings from national statistics institute ISTAT underline the scale of the challenge faced by the new coalition government of Enrico Letta, which has vowed to stimulate growth and tackle a youth jobless rate of almost 40 percent.

A recession that has lasted almost two years has taken a heavy toll on ordinary Italians who are increasingly digging into their savings, ISTAT said in its annual report.

Italy has the highest level in Europe of young people who are neither in education nor employment, at 23.9 percent, the study showed. In Italy's impoverished south, one in three people aged 15-29 fell into this group.

The number of people living in families considered to be seriously deprived has doubled in the past two years to 8.6 million, or about 14 percent of the population, ISTAT said.

Families who meet more than four of nine poverty indicators are considered seriously deprived. These include not being able to heat their home adequately, which affected one in five people in 2012 according to the report, twice as many as in 2010.

The percentage of people in families who could not afford to eat a protein-based meal such as meat every two days rose to 16.6 percent in 2012 from 12.4 the previous year and 6.7 percent in 2010.

More than 50 percent were unable to afford one week of holiday away from home last year, ISTAT said, with the figure rising to 69 percent in the south.

About 14.9 million people, or a quarter of Italy's 61 million population, are living in families that meet three of more of ISTAT's poverty indicators.

Just 57.6 percent of young people who graduated within the last three years are in employment, well below a European average of 77.2 percent, the data showed.

Italians' purchasing power fell by 4.8 percent last year, an "exceptionally steep" decline caused largely by aggressive tax hikes aimed at strengthening public finances, following four years of smaller falls, ISTAT said.

A traditionally high savings rate in Italy has dwindled steadily and is now far below those of France and Germany, with the situation becoming particularly acute in the poor south, the report said. (Reporting by Gavin Jones, Naomi O'Leary and Roberto Landucci; Editing by Catherine Hornby and Pravin Char)