Eurozone finance ministers have endorsed a record 110-billion-euro bailout for Greece. The aid package requires that Athens implement tough austerity measures.
Germany said there was no alternative to the bailout
Eurozone finance ministers, in an emergency session on Sunday, approved a loan package to save Greece from defaulting on its debt. Eurogroup head Jean-Claude Juncker said a total of 110 billion euros ($146 billion) would be spread out over three years. Up to 30 billion euros will be ready to be disbursed in 2010.
Eurozone states are expected to give 80 billion euros while the rest is to be provided by the International Monetary Fund (IMF).
It is by far the largest bailout ever assembled for a country.
Tough times ahead for Papandreou's Greece
Juncker announced a fresh EU summit for May 7 to officially approve the bailout. He stressed the help for Athens was conditional on the Greek government implementing strict financial reforms.
He also said that at Germany's insistence, all ministers would discuss with their national banking sector the possibility of voluntary bank contributions to the aid package.
EU President Herman Van Rompuy welcomed the agreement.
"I am convinced that this sound and ambitious program will enable Greece to put right its economic and financial situation as well as its competitiveness," he said in a statement.
In exchange for financial aid from both the EU and the IMF, Athens has promised further austerity measures to get the country's budget back into shape.
Greek Prime Minister George Papandreou said the he would "do anything to avoid the country going bankrupt."
"It is an unprecedented support package for an unprecedented effort by the Greek people," a somber Papandreou, wearing a dark purple tie, the color used for funerals in Greece, told a televised cabinet meeting.
EU Commissioners for Economic and Monetary Affairs Olli Rehn welcomed Athens' latest austerity efforts as a "very convincing and comprehensive program."
US President Barack Obama told Papandreou in a telephone interview late on Sunday that he welcomed Greece's ambitious reform programs and the support from the EU and the IMF.
Germany 's Merkel backs bailout
Much of Sunday's talks depended on the attitude of Germany, which is expected to foot the largest chunk of the bill - around 22 billion euros.
German Chancellor Angela Merkel had been hesitant about rushing aid to Greece because it is unpopular among Germans.
Germany will have to pay the biggest chunk of the bailout
On Sunday however, Merkel got fully behind the measure, calling the Greek austerity program very ambitious and saying there was no choice but to save Greece.
"I think this is the only way we can restore the stability of the euro," Merkel said. "I'm going to work for the Greece program and its passage."
German Finance Minister Wolfgang Schaeuble said the German cabinet would meet Monday to work on a draft legislation for the aid. He said the bill would then be approved in the German parliament by Friday.
To ensure the stability of the euro, Schaeuble told German public television ARD late on Sunday, "we, as well as the German people and the taxpayer, have to take on this difficult decision [to approve the aid deal]."
He also warned Greece that "the smallest deviation [from the austerity plan] would have consequences, that much is clear," he told ARD.
Widespread protests across Greece
But Athen's plans for painful wage and pension cuts have already triggered widespread protest in Greece with unions planning a nationwide strike on Wednesday.
The austerity measures are deeply unpopular in Greece
The fresh round of cuts aims at saving 30 billion euros ($40 billion) over the next three years with civil servants and pensioners bearing the brunt of the effort.
"These sacrifices will give us breathing space and the time we need to make changes," Papandreou said, defending the measures.
"I want to tell Greeks very honestly that we have a big trial ahead," he said.
Editor: Nigel Tandy