Chancellor Angela Merkel hit out yesterday at accusations of German foot-dragging over Greece, saying that the future of the European Union and Germany's role was at stake and rules had to be changed.

"A good European is not necessarily the one who helps quickly," Mrs Merkel said as she defended in the German Parliament her unpopular decision to take part in an international bail-out of Greece.

"Much more it is someone who sticks to European treaties and national laws and who makes sure that the stability of the eurozone and of all of Europe sustains no damage."

Germany, which will be the biggest provider among eurozone countries to an €110-billion bail-out of Greece with €22.4 billion, was accused of exacerbating the crisis by not agreeing sooner.

But Mrs Merkel said that providing aid before Athens had announced extra austerity measures "would have had the opposite effect" to calming markets and tackling the crisis.

Mrs Merkel was speaking as special legislation needed before the aid can be disbursed got its first reading with the aim of it hitting the statute books tomorrow.

Facing strong opposition among voters - but not in Parliament -to the aid, Mrs Merkel said that the future of the European Union and of Germany's role with the 27-nation bloc was on the line.

"The future of Europe and the future of Germany within Europe is at stake," she told lawmakers.

"No decision is possible or will be possible without us or against us. All of Europe is looking to Germany."

But she said that the Union's rules on member states' budget deficits and national debt, the EU Stability and Growth Pact, had to be reformed in light of what has happened.

"The task of my government, and all members of this house today, is to make sure that this stability pact is adhered to, to defend it and to further develop it, as a lesson of this crisis," Mrs Merkel said.

She said that this should involve tougher penalties against member states who break the rules, although she acknowledged that Germany would have to overcome "strong resistance" among EU partners to any alterations.

Last week Greece's 15 fellow eurozone members and the IMF agreed on the three-year loan package in an effort to prevent Greece being unable to finance its mammoth debts following months of rising borrowing costs.

Ratings agency Standard & Poor's has cut Greek debt to junk status.

It has also cut its ratings on Spain and Portugal, two other countries with shaky finances, stoking fears that the crisis was spreading - something that could force European governments including Mrs Merkel's to bail out banks.

The aid has failed to soothe financial markets, and promises made by the Greek government to slash costs in return for the bail-out have prompted anger among the Greek population. Demonstrators stormed the Acropolis on Tuesday.

Germany has warned Greece to deliver on its promises "to the letter".

"If there are any violations, payments will be stopped. Then Athens will once again be threatened with bankruptcy," Finance Minister Wolfgang Schaeuble said.

The origional Stability Pact, later changed to the Stability and Growth Pact, was originally proposed by Germany to avert a Greece-style crisis.

But immediate and tough penalties demanded by Germany for breaches of budget discipline were watered down by other future members of the eurozone as being too rigorous.

In the eyes of many analysts, the pact has gradually lost credibility since, and this week both Germany and The Netherlands have said that one lesson of the eurozone debt crisis is that in future the rules must be tight and respected.

Meanwhile European Economic Affairs Commissioner Olli Rehn said yesterday that he would push to see tougher fiscal rules introduced for the bloc, to target overall debt levels, in line with French and German calls.

"I fully agree that we need to reinforce the Stability and Growth pact," Mr Rehn told reporters as he presented the Commission's latest economic forecasts.

The pact requires nations to work to keep their public deficits below three per cent of GDP and public debts below 60 per cent of output, a task which proved beyond them during the global recession.

"We need a more rigorous, preventative surveillance of fiscal policy and we also need to put much more focus on debt rather than only deficit," he added.

Commission services were preparing propositions to that effect, the Finnish Commissioner declared.