"You are welcome!"
I am italian and I often say "prego" as answer of "thanks", however i do not know anybody from Caorle... Then it's true that the other replies that you wrote are correct answers (di niente, di nulla, also figurati and many other), but the english translation will be different (di niente/di nulla = it's nothing)
Prego is a short form to answer to "thanks" which stands alone...it has nothing to do with "you are welcome" which translates to "sei il benvenuto (sing.)" or "siete i benvenuti (plur.)" which have the same meaning of the english "Welcome!".
Another meaning of "prego" is "I pray", literally "(io) prego"
(a chi ringrazia) don't mention it!, you're welcome!, not at all!(invitando qn ad accomodarsi)please sit down!(invitando qn ad andare prima) after you!
prego, si accomodi (entri) please come in(si sieda) please take a seat
posso prenderlo? — prego! can I take it? — please do!
prego? pardon?, sorry? (Brit)