Greek prime minister George Papandreou has called an emergency cabinet meeting for today as the governing Socialists revolt against a planned referendum over the EU bailout deal.

A statement from Mr Papandreou's office said the meeting will be held at noon and comes after finance minister Evangelos Venizelos broke ranks with the prime minister on the referendum proposal.

Earlier today, Socialist politician Eva Kaili also said she would not support the government in Friday's confidence vote.

Ms Kaili urged Mr Papandreou to reverse his decision to call a referendum on Greece's hard-won international bailout package.

Without Ms Kaili's support, the governing Socialists hold a one-seat majority in the 300-member parliament.

An MP from the ruling Socialist party has said prime minister George Papandreou is "history".

Dimitris Lintzeris added that Mr Papandreou must convene an emergency meeting of ministers.

The drama came after European leaders drew a line in the sand for Greece, saying its referendum on a hard-won bailout deal will decide whether it stays in the eurozone - and vowing Athens will not get new aid until the result is in.

The acknowledgement that the proposed vote - which will likely take place on December 4 - could see Greece leaving the currency union is the first official admission that such an exit is possible and follows almost two years of pledges to the contrary.

The move to tie the vote to the fate of the euro is a huge gamble that could endanger the future of the currency union, the centrepiece of Europe's postwar unity, and potentially push the world economy into another recession.

"The referendum ... in essence is about nothing else but the question, does Greece want to stay in the eurozone, yes or no?" German chancellor Angela Merkel said at a news conference together with French president Nicolas Sarkozy.

The leaders of the two biggest eurozone economies spoke to the press after emergency talks with Mr Papandreou in Cannes, France.

The discussion also included International Monetary Fund head Christine Lagarde and other top EU and eurozone officials.

By turning the referendum into a popular vote on whether Greece wants to remain in the eurozone - the currency union that gave it access to the club of Europe's richest countries but also allowed it to pile up a massive debt mountain - leaders are taking a risky bet.

The exit of the eurozone's weakest member could trigger a dangerous domino effect that could quickly see Ireland and Portugal, the other two countries that have received bailouts, also leave the currency bloc and cause the financial collapse of Italy and Spain, which are barely hanging on.

The meltdown started after Greek finance minister Evangelos Venizelos broke ranks with him on the referendum proposal, which horrified Greece's international partners and creditors, triggering turmoil in financial markets as investors fretted over the prospect of a disorderly debt default and the country's exit from the eurozone.

Alongside his referendum pledge on Monday, Mr Papandreou said his government would face a confidence vote on Friday. With open rebellion among his ranks, it's unclear whether the administration can survive that long, with many in Greece calling on the establishment of a national unity government, incorporating the opposition.

"Right now, the country is headless," conservative opposition New Democracy party spokesman Yiannis Mihelakis said.

Mr Venizelos said the country's attention should be focused on getting a crucial instalment of bailout funds quickly, which has been delayed because of Mr Papandreou's decision to back a referendum into a bailout package agreed just a week ago.

"Greece's position within the euro area is a historic conquest of the country that cannot be put in doubt," Mr Venizelos said in a statement issued shortly after his return from Cannes in the early hours of Thursday, where he accompanied Mr Papandreou.

Mr Venizelos said Greece's participation in the eurozone and EU membership "cannot depend on a referendum" and that the next instalment should be disbursed "without any distractions or delay".

Although he had defended Mr Papandreou's decision to hold a referendum in a speech delivered immediately after the premier's announcement on Monday, an official close to the minister has said Mr Venizelos had not been told in advance that Mr Papandreou was to announce a public vote.

Other ministers and governing Socialist party deputies distanced themselves from the prime minister's referendum idea.

Development minister Michalis Chrisohoidis issued a statement calling for unity, and saying the priority was for parliament to ratify the new debt deal.

"There can be no... return to the drachma and the past," Mr Chrisohoidis said.

"We must all assume our responsibilities."