In this paper, we propose an Efficient Two-Level I/O Caching Architecture (ETICA) for virtualized platforms that can significantly improve I/O latency, endurance, and cost (in terms of cache size) while preserving the reliability of write-pending data blocks. As opposed to previous one-level I/O caching schemes in virtualized platforms, our proposed architecture 1) provides two levels of cache by employing both Dynamic Random-Access Memory (DRAM) and SSD in the I/O caching layer of virtualized platforms and 2) effectively partitions the cache space between running VMs to achieve maximum performance and minimum cache size. To manage the two-level cache, unlike the previous reuse distance calculation schemes such as Useful Reuse Distance (URD), which only consider the request type and neglect the impact of cache write policy, we propose a new metric, Policy Optimized reuse Distance (POD). The key idea of POD is to effectively calculate the reuse distance and estimate the amount of two-level DRAM+SSD cache space to allocate by considering both 1) the request type and 2) the cache write policy. Doing so results in enhanced performance and reduced cache size due to the allocation of cache blocks only for the requests that would be served by the I/O cache. ETICA maintains the reliability of write-pending data blocks and improves performance by 1) assigning an effective and fixed write policy at each level of the I/O cache hierarchy and 2) employing effective promotion and eviction methods between cache levels. Our extensive experiments conducted with a real implementation of the proposed two-level storage caching architecture show that ETICA provides 45% higher performance, compared to the state-of-the-art caching schemes in virtualized platforms, while improving both cache size and SSD endurance by 51.7% and 33.8%, respectively.