EU sets tough conditions for Greek bailout

Eurozone finance ministers, meeting in Brussels, said the Greek parliament would now have to pass a package of cuts and reforms on Sunday.

In addition, Greek politicians will have to find an additional €325million in savings for 2012.

Greek unions had already called a 48-hour strike, beginning on Friday, in opposition to the measures.

The chairman of the meeting of Eurozone finance ministers, Luxembourg Prime Minister Jean-Claude Juncker, said Greek leaders would have to give "strong political assurances" that they will continue to implement reforms after a general election due in April.

"Despite the important progress achieved over the last days, we did not yet have all necessary elements on the table to take decisions today," Junker said, referring to a plan agreed by Greece's fragile ruling coalition after days of talks.

He also welcomed "assurances provided by the Greek government that all the necessary elements will be put in place in the coming days".

Eurozone countries were also "seriously considering" creating a new, separate account for Greece, which would block a portion of state revenues to guarantee the repayment of bailout loans, EU economic affairs commissioner Olli Rehn said.

A Franco-German proposal on budgetary discipline, with automatic penalties for eurozone nations that overspend, is "one possibility for reinforcing surveillance and effectively implementing the programme," he said.

The plan agreed by the Greek government earlier this week includes 15,000 public-sector job cuts, liberalisation of labour laws, lowering the minimum wage by 22% from €751 per month to  €600 and negotiating a debt write-off with banks.

But a key demand of the EU, IMF and European Central Bank was reform of the pension system, an issue that proved to be a stumbling block.

Greek Prime Minister Lucas Papademos tried to convince his coalition partners to overhaul pensions and save 300 million a year.

Talks broke up without an agreement, but officials later announced that a compromise had been reached. It was not clear how the  €300 million saving would be made.

The government needs the backing of the eurozone ministers and the approval of the Greek parliament before the deal can be finalised.

Greece is deep in recession with unemployment rising above 20%.

Unions have already said they will go out on strike over the latest austerity plans, condemning them as "painful measures" that would create misery.

Meanwhile, US President Barack Obama has reaffirmed America's willingness to help stabilise the eurozone.

In a meeting with Italian Prime Minister Mario Monti, he also urged European countries to promote a strategy of growth.