A marathon cabinet meeting has concluded with ministers expressing unanimous support for prime minister George Papandreou's surprise decision to call for a referendum on a hard-won European plan to rescue the Greek economy, a government spokesman said.
Ilias Mossialos said early today that the referendum will be held "as soon as possible" once the basics tenets of the debt agreement have been reached.
Earlier, Mr Papandreou said the referendum would be on the debt deal, Greece's European course and its participation in the euro currency used by 17 European Union nations.
Mr Papandreou's referendum announcement was strongly criticised across Europe and caused stock markets around the world to plunge.
Mr Papandreou's government still faced a battle for survival with a vote of confidence scheduled for Friday and a grilling from frustrated European leaders expected ahead of a Group of 20 summit in the French Riviera.
After a gruelling seven-hour Cabinet meeting, Mr Mossialos said Mr Papandreou's ministers expressed "total support for the initiatives taken by the prime minister" and said the referendum would be held "as soon as possible".
However, government officials said two ministers still had strong reservations to the idea of a referendum, which will be the first in Greece since the country voted to abolish the monarchy in 1974.
World markets were hammered across the world after Mr Papandreou's surprise Monday night announcement amid fears the vote could unravel a deal which took European leaders months of complex negotiations among themselves and with banks to reach.
Greece's general price index plunged to close down 6.92%, while in Germany the Dax index, the major stock market average, lost 5% - the equivalent of about 600 points on the Dow.
The French stock market closed down 5.4%, the Italian 6.7% and London 2.2%.
European leaders had made no secret of their displeasure.
"This announcement surprised all of Europe," said a clearly annoyed French president Nicolas Sarkozy, who has been scrambling to save face for Europe before he hosts leaders of the G20 major world economies later this week.
"Giving the people a say is always legitimate, but the solidarity of all countries of the eurozone cannot work unless each one consents to the necessary efforts," he said.
Mr Sarkozy and German chancellor Angela Merkel, who have been at the forefront of Europe's efforts to contain the debt crisis, talked by phone and agreed to convene emergency talks in Cannes, France, to which Mr Papandreou was also summoned to discuss implementation of the bailout.
Dutch prime minister Mark Rutte, meanwhile, said he would try to prevent the referendum plan, saying he would "attempt to see that it doesn't happen".
But he conceded it was up to Greece how it approves or rejects the European deal.
Mr Papandreou's decision had left his government teetering on the verge of collapse as his own deputies rebelled and his Socialist party saw its parliamentary majority whittled down to just two seats in the 300 member legislature.