Brazil have dropped down to third in the rankings, and Argentina to fifth, after an indifferent run of form.
Brazil's fall to third will be particularly disappointing, as they have been at the sharp end for almost all of this century.
Argentina also drop two places, with both France and Germany leaping past them on the back of some strong showings in the European qualifiers.
Spain jump up to seventh after a positive three months, while England stay rooted in eighth.
Cameroon, remain the highest African team in the rankings, at 14th, but Ghana and Ivory Coast have also jumped into the top the top 20, as have the United States.
Portugal are sixth, and reigning European champions Greece 15th, while Turkey, Russia, Scotland and Mexico drop out of the top 20.
Japan are the best placed Asian team, at 40th, with Iran 47th and Australia only 48th.
The top 20 in the FIFA rankings:
1. Italy (1653 pts)
2. France (1585 pts/ +2),
3. Brazil (1484 pts/-1),
4. Germany (1467 pts/+1),
5. Argentina (1373 pts/-2),
6. Portugal (1323 pts/+1),
7. Spain (1273 pts/+2),
8. England (1240 pts/0),
9. Holland (1220 pts/-3),
10. Czech Republic (1096 pts/0),
11. Croatia (1080 pts/+1),
12. Romania (1068 pts/+3),
13. Ukraine (1044 pts/-2),
14. Cameroon (1019 pts/-1),
15. Greece (1011 pts/+1),
16. USA (978 pts/+13),
17. Sweden (957 pts/+5),
18. Poland (933 pts/0),
19. Ghana (917 pts/+9),
20. Ivory Coast (906 pts/+5)
Among other teams, Bosnia-Herzegovina have made big gains, rising 20 places to 28th. Serbia are also upwardly mobile, jumping from 31st to 22nd. Nigeria drop to 32nd, while the Koreans remain outside the top 50, in 51st place.
