The German government has failed to win backing from opposition parties for its bill to participate in the Greece bailout. The law is however, still expected to pass on Friday.
Merkel warned of a serious threat to the eurozone
The German government has failed to persuade opposition parties to vote in favor of granting Greece billions of euros in loans. Negotiations with the opposition Social Democrats on Thursday ended without a joint resolution.
However, the disagreements over the rescue package have no real effect on it passing a vote by both houses of parliament on Friday.
The parliamentary majority of Chancellor Angela Merkel's governing coalition of Christian Democrats and Free Democrats in the lower house should ensure the bill is passed into law, in time for a eurozone summit scheduled on Friday.
German Chancellor Angela Merkel said the eurozone was faced with a real threat. "This is an unusually serious situation," she said.
Germany is lending the lion's share of the eurozone's aid
Finance Minister Wolfgang Schaeuble described the situation as a "difficult and fundamental crisis" threatening the stability of the eurozone single currency.
Opposition calls for financial transaction tax
Greece is to receive a total of 110 billion euros ($139 billion) from eurozone nations and the International Monetary Fund.
Berlin is to provide the lion's share of the eurozone's aid to Greece - 22.4 billion euros over three years. The money is to be provided by the state-owned KfW bank.
Germany's largest opposition party, the Social Democrats, had linked their backing for the bill to calls for a European financial transaction tax which would force banks to contribute more to fighting the financial crisis.
The party can now abstain from supporting the Greek rescue bill in Friday's parliamentary vote.
The Bundestag, Germany's lower house of parliament, is scheduled to vote on the legislation on Friday. The upper house is expected to approve the bill on the same day so it could be signed into law by President Horst Koehler.
Editor: Rob Turner