Second Greek bailout agreed

The bailout was granted on the condition that Greece reduces its debt from the current 160% of its GDP to 120.5% by 2020 and accepts permanent presence of EU monitors overseeing economic management.

Without the loan Greece will fall into bankruptcy by 20 March when maturing loans must be repaid.

Greece needs the funds to avoid bankruptcy on 20 March, when maturing loans must be repaid.

The euro immediately rose on reports of the deal.

The deal also means that private holders of Greek debt will take losses of 53.5% on the value of their bonds.

When all the elements of the exchange are accounted for, the loss to investors is expected to be as much as 70%.

Within the next two months, Greece will also have to pass legislation giving priority to debt repayments over the funding of government services.

Athens will also have to set up a special account, managed separately from its main budget, that will at all times have to contain enough money to service its debts for the coming three months.

The Greek parliament is expected to vote on the bailout on Wednesday.

The head of the IMF, Christine Lagarde, who also took part in the negotiations, said the deal "should give enough space for Greece to restore its competitiveness".

Speaking after the deal was reached, Greek Prime Minister Lucas Papademos said he was "very happy" with the outcome.

A first rescue package worth 110bn euros in 2010 was not enough to avert Greece's deepening crisis.