Three coalition parties chose to boycott the vote of confidence: Lega, Forza Italia and the Five Star Movement.
The consequence is now expected to be that Draghi resigns and that new elections are announced, reports AFP.
Wanted to resign
Draghi also managed a vote of confidence last week but then chose to announce his resignation because he felt that the support was not enough.
The reason was that the Five Star Movement did not take part in the vote, out of dissatisfaction with Draghi and the support package for the Italians that the vote was about.
But instead of resigning, Draghi was persuaded by President Sergio Matterella to reconsider his decision.
It was already clear that the five-star movement would not support Draghi during Wednesday's confidence vote.
But since a breakaway group led by Foreign Minister Luigi Di Maio with 60 of the party's MPs gave his support to Draghi, he would still have a majority in parliament.
Several parties abstained
Decisive for how Wednesday's election of confidence would go was instead how Silvio Berlusconi's party Forza Italia and Matteo Salvini's far - right party Lega would act.
They now chose to boycott the vote.
Despite this, Draghi received enough support to be able to formally remain, but he is not expected to declare himself the winner.
Lega and Forza Italia say it was impossible to restore confidence in the governing coalition after the political crisis caused by the Five Star Movement.
Wanted a new coalition
On Wednesday, Draghi addressed the Senate, just hours before the vote of confidence.
- The only way forward is to build a new coalition pact, said Mario Draghi.
Draghi called on Parliament for broad support in order to lead the government and implement the necessary reforms, including to take part in EU pandemic support.
He said he was moved by the recent support he received from both ordinary Italians but also from the nearly 2,000 mayors who signed a petition asking him to remain in office.