The Greek parliament has approved a deeply unpopular new property tax, one of several extra austerity measures the government is rushing through to plug a budget hole uncovered by EU-IMF inspectors earlier this month.

All 154 of the ruling Socialist Pasok party's deputies voted in favour of the measure, winning a majority in the 300-seat parliament.

Ordinary Greeks, exasperated by pay and pension cuts, mass unemployment and tax rises, staged new strikes and demonstrations outside parliament.

Greek prime minister George Papandreou earlier pledged his country would meet its commitments to international lenders, as Russia's central bank chairman said the country was "close" to default.

European shares surged by 4.3 per cent today in the biggest one-day percentage gain since May 2010 and safe-haven German bonds fell on reports that Euroeapn policymakers were preparing decisive action to tackle the debt crisis by leveraging up the €440 billion European Financial Stability Fund (EFSF).

The cost of insuring Italian, Spanish and French debt against default also fell on hopes of a bold solution, which appear to have little grounding in immediate political reality.

Greek  told German industry leaders the country would return to prosperity, appealing to his European partners to help him tackle the country's debt crisis.

Mr Papandreou, who must implement reforms to receive further aid, will meet chancellor Angela Merkel later this evening to discuss the euro zone debt crisis, two days before a parliamentary vote in Berlin on an expanded bailout fund to prop up weaker members in the EU.

"I promise you we Greeks will soon fight our way back to growth and prosperity after this period of pain," he said in an impassioned address to a Federation of German Industries conference in Berlin.

Mr Papandreou said he understood the reluctance of taxpayers in other EU countries to help his country out of its crisis but said it was not an investment in the mistakes of the past, rather in the success of the future.

"The euro zone must now take bold steps toward fiscal integration to stabilise the monetary union. Let's not let allow those who are betting against the euro to succeed," he said.

But Russia's central bank chairman Sergey Ignatiev was less optimistic, warning of impending trouble. He said Portugal and Ireland face "serious problems". The markets have also began "doubting the ability of Spain and Italy to service their sovereign debt", he added.  "Unfortunately, European politicians so far haven't taken decisive and effective actions to convince financial markets that the sovereign debt problem will be resolved," he said.

Luxembourg's Jean-Claude Juncker, who leads the group of euro zone finance ministers, said this afternoon that Ireland is "on a good track" with its deficit-cutting programme. Mr Juncker told the European Parliament in Strasbourg that he admired Ireland's progress in its consolidation measures.  "This clearly shows that there is a way out of the situation different countries are in. Ireland is on a good track," he said.

Ms Merkel, under pressure from voters and some in her centre-right coalition to take a tough line with Greece before Thursday's vote, said Germany would show solidarity with its partners to secure the future of the euro.

"We will provide all the help desired from the German side so that Greece regains trust," she told the conference. "If the stability of the euro is at stake - and the experience of the last few years (tells us) that the difficulties of one country endanger our common currency - then that obliges us to show solidarity within the common currency.

"We will help if the country does all it can in terms of its own homework," she said, also reiterating her opposition to common debt issuance in the euro zone.

A poll earlier this month showed that 76 per cent of Germans are opposed to granting any further aid to Greece and top-selling Bild newspaper reflected public hostility to further bailouts by insisting Ms Merkel should be tough on Mr Papandreou.

"This is what you have to tell the Greek prime minister to his face, Frau Merkel," wrote the paper, listing demands ranging from making sure taxes were paid to getting rid of the bloated state apparatus and "thinking the unthinkable" - namely default, a debt restructuring and even leaving the euro zone.

Ms Merkel is battling to convince rebels from within her own party to vote for an enhanced EFSF in parliament on Thursday. Although the bill will be passed as opposition parties support it, she faces a blow to her authority if she has to rely on their votes. The centre left says Ms Merkel would be finished if she fails to secure a majority from her own ranks. "Agreement to this fund is of the greatest significance," Ms Merkel said.

Mr Papandreou echoed that sentiment, saying Europe's bailout fund had to be expanded. "Along with much tighter fiscal oversight, we must expand the EFSF and formulate permanent mechanisms for economic stability and solidarity," Mr Papandreou said.

Greek finance minister Evangelos Venizelos, back from tough talks in Washington with the IMF, said today speculation on default scenarios was harming his country and it was crucial to stick to the July 21st agreement on a second rescue for Greece.

Mr Venizelos said the troika of senior EU-IMF inspectors would return to Athens this week and Greece would receive the next €8 billion instalment of aid in time to avoid bankruptcy next month. A source close to the team said they would probably return tomorrow to complete a review of compliance with the bailout programme.

The IMF and EU team has criticised Athens for dragging its feet on cutting the size of the bloated public sector because it has made little progress on a promise to cut the 730,000 public workforce by a fifth and sell off loss-making state firms.

The government has also failed to end rampant tax evasion, while a third year of economic contraction has eroded budget revenues and undermined Greece's goal of cutting the budget deficit to 7.6 per cent of annual output this year.

Most analysts expect Greece to get the cash but default anyway within a few months, perhaps early next year.

Agencies