Portuguese government on verge of collapse and may need to seek EU bailout

Prime Minister Jose Socrates has threatened to resign if he fails to garner support in parliament for the fourth austerity package in a year, the heart of his economic programme.

And the main centre-right opposition is demanding the "stability and growth" plan be rejected in the afternoon debate, saying Socrates' minority government must be toppled so a new government can regain market trust.

"D Day: Socrates resigns," blared the front pages of many Portuguese papers, already sure of his political demise.

The drama is unfolding on the eve of a European Union summit in Brussels which should finalise the bloc's response to a eurozone debt crisis that has already forced Greece and Ireland into bailouts.

In a grim backdrop to the debate, transport strikes crippled the country with rail, metro and ferry services grinding to a halt to protest salary cuts.