An agreement between Athens and the 19 eurozone finance ministers was confirmed on Friday evening in Brussels, the third round of such talks in a week.
Few details were released immediately following the announcement. According to the Associated Press news agency, the eurozone agreed to extend Greece's loan by four months in exchange for Athens' agreeing to avoid unilateral actions that might affect the budget.
Greece has until Monday to present a list of reform measures it plans to implement.
Earlier a source from the Greek government had referred to "an initial agreement on a joint draft text" between the partners, with the details still to be worked out.
Athens still awaits a formal decision made over the 240-billion-euro ($273-billion) bailout program, due to run out on February 28.
Greece is asking for a six-month loan extension from its European creditors, in an effort to avoid a potentially disastrous exit from the euro.
The country needs almost 12 billion euros ($14 billion) to help finance bond repayments by August.
Holding out hope
Prior to the start of the latest round of talks, Eurogroup head Jeroen Dijsselbloem had expressed cautious hope.
"I do not have to tell you it's quite complicated," he said, "there is still reason for some optimism but it is very difficult."
Greek Finance Minister Yanis Varoufakis had also appeared hopeful, saying that while his government had gone "not the extra mile but an extra ten miles and now we are expecting our partners to meet us not halfway, but one fifth of the way."
On Thursday, he submitted a request to the European Council asking for the expiry date to be delayed, as well as for the removal of tough austerity measures.
In a step forward, Varoufakis even announced his leftist-government's willingness to work with the former "troika" - the European Commission, the European Central Bank and the International Monetary Fund - to monitor the extension.
Prime Minister Alexis Tsipras won January's elections on a campaign centered around winding back the restrictions, which many Greeks believe have economically crippled the country.
Met with resistance
European leaders had mixed feelings about Greece's request, with Greece's most important creditor, Germany, largely rejecting the idea as falling short.
Martin Jäger, spokesman for Germany's Finance Minister Wolfgang Schäuble, told news agency DPA the letter was "not a substantial proposal for a solution."
One German official went further, describing the request as a "trojan horse."
an/kms (Reuters, AFP, dpa, AP)