The Spinners were in control for most of the game after a 12-7 opening period and extended that lead at the next two breaks to own a game-high 11-point lead at three-quarter time.
The pressure defence from Nick Scott (five rebounds) and Steve Elliott (four points, one assist) sparked Australia while the team executed well on set plays with Lachlin Dalton also playing some strong minutes.
Having scored just 30 points up until then, Italy suddenly came alive in the fourth term and found their offence, putting some scoreboard pressure on Australia as the game went down the stretch.
After a free-throw from Jake Fulwood, Italy went on a 7-0 run and despite a time-out from coach Luke Brennan and another free-throw from Tom O'Neill-Thorne, the opposition kept rolling.
Italy's run reached 15-2 to take a lead inside the final three minutes and with all the momentum, they looked to be in the box seat.
Fulwood was able to respond with a big offensive rebound and put-back though, the Spinners' first field goal of the quarter with just two minutes to go, and he then got past Italy's full court press with a long pass to Jontee Brown (ten points, six boards) who connected on the basket.
Francesco Cancelli responded for Italy to tie the game once again and both teams then missed potential game-winners as Fulwood and O'Neill-Thorne just came up short with the match headed into overtime.
However, Australia were able to re-group ahead of the extra period and any chance of a boil-over was quickly extinguished on the back of an 8-0 streak to start overtime.
Playing 38 minutes, O'Neill-Thorne once again paced the Aussies with 22 points, seven rebounds, nine assists and three steals but the effective play of Fulwood off the bench (22 points, eight rebounds in 26 minutes) continues to play a major role in the Spinners fortunes as they won the bench battle comprehensively, 24-2.
Thanks to the victory, the Spinners have now earned a spot in the Quarter-Finals regardless of the Day 5 outcomes as the top four teams from each pool advance.
Australia will take on the Pool A leaders and undefeated Turkey for their final game of the pool stage in what should be the perfect tune-up before they get set for the Quarter-Finals beginning Thursday night/Friday morning AEST.
Standings (top four from each pool advance to Quarter-Finals):
Pool A Pool B
Turkey 4-0 (+125) Japan 4-0 (+100)
Australia 3-1 (+23) Great Britain 3-1 (+143)
Canada 2-2 (+9) Germany 3-1 (+81)
Iran 2-2 (-11) France 2-2 (+41)
Italy 1-3 (-46) USA 0-4 (-76)
Brazil 0-4 (-96) South Africa 0-4 (-285)
The Australian Under-23 Spinners World Championship Schedule (all times AEST):
June 13: Australia vs. Turkey at 12pm
June 15: Quarter-Finals
June 16: Semi-Finals
June 17: Bronze and Gold Medals