Video | Greek government weathers critical confidence vote

Prime Minister George Papandreou's new cabinet was approved in parliament by 155 votes to 143, with two abstentions. MPs will now be asked to approve €28 billion (£25bn) of cuts, tax rises, fiscal reforms and privatisation plans.

The confidence vote took place early on Wednesday after a heated debate on Tuesday that saw sections of the opposition briefly walk out.

Eurozone ministers say the legislation must be passed to receive a €12 billion loan Greece needs to pay its debts.

Earlier, thousands of people gathered outside the parliament building in Athens to protest against both the austerity measures and politicians in general. Many chanted: "Thieves! Thieves!"

"There is great indignation that you see around you," one protester was reported as saying by the BBC. “There is a lot of desperation that is registered on the faces of the people around us. It means there is no future."

"I believe we should go bankrupt and get it over with. These measures are slowly killing us," Efi Koloverou, a 22-year-old student, told Reuters. "We want competent people to take over."

Papandreou reshuffled his cabinet and replaced his finance minister last week after weeks of demonstrations against his handling of the crisis.

He earlier acknowledged the austerity measures were tough but said the last thing Greece needed now was an election. "At this time of pain I want to send a message to all Greeks," he said. "Yes, the course is difficult but there is light at the end of the tunnel.

"We all have to agree that we will put an end to deficits. We want to make a leaner, healthier state, because otherwise our country cannot take the burden."

The assertions were however dismissed by some opposition MPs during the debate.

"This is not a programme to salvage the economy, it's a programme for pillage before bankruptcy," Alexis Tsipras of the Left Coalition said.

Papandreou must now persuade parliament to approve a five-year package of €28 billion of tax increases and spending cuts by 28 June.

It will then have to push through laws implementing the reforms in time for an extraordinary meeting of eurozone finance ministers on 3 July.