A state funeral will be held in one of the areas worst hit by the Italian earthquake after residents rebelled against the Government's original plans

Construction crews worked through the night to build a tent complex to host an Italian state funeral in earthquake-devastated Amatrice after the public rejected the government’s original plan to hold the service in a distant airport hangar.

The funeral, due to be held late on Tuesday for more than 200 of the 292 victims, will now take place on the edge of Amatrice’s obliterated medieval centre on the grounds of a Catholic retreat for the elderly.

Italy also observed a second day of national mourning following the August 24 earthquake that flattened villages in central Italy.

The magnitude six earthquake struck in the early hours and was felt across a broad swathe of central Italy, including Rome and the Lazio region into Umbria and Le Marche on the Adriatic coast.

Amatrice was among the hardest-hit towns. Initially, authorities planned to hold the funeral in the provincial capital of Rieti – some distance from the earthquake-hit area – and let survivors watch it on television.

Residents already battling grief and trauma rebelled against the idea and Prime Minister Matteo Renzi reversed his decision.