Where would be the best area of Italy for a family (2 KIDS,5 AND 3) in June/jULY.Nearby waterparks/zoo or other attractions are a must
Mike

Gardaland on Lake Garda.

Is your main priority a beach or waterpark/kiddie attractions? The Italian Lakes really aren't what comes to mind for a "beach holiday" because sand is extremely limited and the water is very cold for swimming. Other than Gardaland, there isn't much in the area to amuse such young children. You might want to stay somewhere like Lake Bracciano. There, you have small, charming towns to base in and walk around in the evening. Plenty of restaurant choices, a lake to swim in, a short drive from actual beaches on the sea, and a quick train ride into Rome for all kinds of amusement, both adult and child friendly.

Ideally a combination of beach and attractions,we went to the Algarve last year.What about Sicily?I understand the beaches are good but not much to keep the kids entertained if we are away from the beach.Any thoughts?

You might look into a "villaggio turistico" in Sicily. (Just google it.) They're resort villages that often have "mini-clubs" for children, although yours are too young for some of them. Also, be aware that you'll find less English spoken in Sicily than in the Algarve.

In general, Italy doesn't have many resorts with kids' clubs because that's not the way most Italians vacation. The family stays together through the day and evening. Vacations are multi-generational too, with lots of grandmothers brought along to watch the kids. Sardinia has lots of beautiful beaches and I beleive one large resort near Cagliari, Forte Village, might have a kids' club. But if you really want to see some sights other than the beach, staying outside a large city like Rome, or possibly on the Tuscan coast near Lucca might be best.

OK, any suggestions for a hotel or appartment with pool within travel distance of a beach and gardaland then?

Jesolo, about 40 minutes north of Venice has wide beaches, waterparks and other attractions.
http://www.jesolo.it/default.asp?L=3