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Elizabeth,The visa allows you to enter the country for more than 90 days, once you are here you must apply for a permesso, that is what allows you to remain here. You use the same info you will use for your visa but go to the local questura. You are correct to have the cousin fill out the correct forms (they have to have the stamp and accompanied by a copy of thier carta d'identita). Once you move to Italy and get your permesso you can move to another area, you just need to notify the local questura of your address change. I would recommend you do not tell this intention to your local consulate, could be grounds for visa denial.

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Elisabetta, The above information may confuse you a bit as it is mainly related to EU or USA citizens seeking  permanent or long term residency in IItaly. You are doing the right thing by obtaining your temporary residency through the �������� Consulate in Australia, as a change of status from the 3 month tourist permit may be more complicated than applying for a longer stay from your present country of residence. In any case, you will have to contact the local "questura" (the nearest to your relative's stated residence) within a week from arrival and they will send a police officer to verfy. EVen if you are not there when the police arrives, any relative or neighbour may declare that you are living there, but absent at that particular time. Once the police has granted the "permesso", you will be able to change your address by contacting the nearest "questura", but the police will ask for some proof of residence (letting contract, letter from the owner of the property, or similar). Keep in mind that they will again send an officer to verify that you are living at the given address. Every time when you change addresses, the procedure will have to be repeated. I am certain that the �������� Consulate will ask you for all necessary paperwork and certainly for comprehensive health insurance. Enjoy your stay in Italy!

Galaplacidia ,  More than 90 days  do not is a turistic Visa :)  And the Polizia do not send anyone to check , this checking - in italy - is only by commune Anagrafe Office - and a Declaration about living Here , issued by a friend , DO NOT IS ENOUGH , to prove  that she lives there .. in Italy, there are laws and procedures that must be followed and implemented - the time does to you, it's finished - 

Ugo, if you carefully read Elisabetta's post, she is talking about at least a temporary residence with a possible permanent one. In that case, she should get a temporary visa and apply for the "permesso" at the local "questura". And yes, an officer from the local police will come to check details. At least, that is done in Tuscany (Lucca Province), I cannot confirm what is done elsewhere. In any case, Elisabetta mentions that their cousin lives in Tuscany. My husband is an Australian citizen and has had to do this. And a few Australian friends in Tuscany have gone through the same procedures. So I should know what I am talking about. In any case, it is better to request a temporary visa for more than 90 days in Australia, before they leave. And the �������� authorities have accepted letters from relatives or even friends as proof of domicile. They would check it, though.

Further to my previous post, here is the official information 

First, my apologies for my late reply.  Thank you Bruno, Ugo and Gala for your advice and information. Gala, I have also heard about a letter being enough for domicile.  My cousin is elderly and does not have internet. I worry the forms will be too hard for him.  I have found an example letter on the internet and will send via email through another cousin that lives nearby.  I thought that would be easier for him than filling out a three page form? I will let you know how it goes.  Also no one seems to be able to tell me how much money I need to show in my bank account as proof of being independant. Thanks again