Greek prime minister Alexis Tsipras was facing open rebellion in his coalition as he moved to act on demands by Greece's lenders for a series of cuts and tax rises by tomorrow's deadline.
With dozens of MPs in his Syriza party threatening to defect, Mr Tsipras will need the support of the opposition to pass the package, putting the future of his government in doubt.
Panos Kammenos, the leader of the junior coalition partner, Independent Greeks, said his party could not agree to the measures and accused Greece’s lenders of attempting a “coup”. A number of Syriza MPs said they would vote against the draft laws, which include VAT hikes and pension reforms.
Greece’s international lenders have insisted it enact the laws by tomorrow as a condition for opening talks on a bailout that would avert a Greek default and keep it in the euro zone.
Greece's ailing banks are due to remain closed at least until Thursday, but their prospects of staying afloat received a boost yesterday when euro zone governments agreed to a request from the European Central Bank to provide €10 billion in guarantees so as to enable Frankfurt to maintain or increase its emergency funding to the Greek banks. That would allow the banks to reopen soon, though capital controls are expected to remain in place for a number of months.
Syriza, the left radical party that swept to power on an anti-austerity platform in January, has been reeling since Mr Tsipras reversed course and accepted a package of spending cuts, tax increases and reforms that was tougher than one he had encouraged Greek voters to reject in a referendum earlier this month.
Emerging from 17 hours of talks with other EU leaders, Mr Tsipras said he "fought to the end to achieve the best possible outcome" and said he had been left with a choice between accepting the terms or bringing Greece out of the euro.
The scale of the rebellion will become clear this morning, when Mr Tsipras is due to address Syriza MPs. A number of the prime minister’s allies have suggested he could sack prominent rebels such as energy minister
, who said the deal was “humiliating” and should be rejected.
Mr Tsipras could invite opposition parties to form a government of national unity.
In Brussels, finance ministers kept the pressure on Athens by warning that further steps were needed before talks on the bailout of up to €86 billion could begin. "There seems to be a lot of people who have jumped the gun here and thought that the beginning of the negotiations is automatic," said Finnish finance minister Alex Stubb. "No, it is absolutely conditional on the decision by the Greek government and the Greek parliament." Finland is one of a number of countries that need parliamentary approval for any third bailout package for Greece.