Greek Prime Minister George Papandreou yesterday took a step back from a plan to hold a referendum which had incensed European leaders trying to organise a rescue plan for the debt-ridden nation.
As eurozone leaders at the G20 conference in Cannes piled on the pressure, Mr Papandreou said he was ready to drop the plan to put the European package aimed at keeping Greece in the euro to a vote.
But Germany and the European Union responded that Greece would be judged on its actions, not its words.
At the same time, Greek Finance Minister Evangelos Venizelos warned that Greece needed the next eight-billion-euro slice ($11-billion) of aid from its partners by December 15.
Later, Mr Papandreou, who faces a confidence vote in Parliament today, told members of his socialist PASOK party that Greece had to implement the terms of the rescue package designed to save the country from bankruptcy, or face a humiliating exit from the 17-nation eurozone.
'Rejecting the plan via a 'No' vote in a referendum, holding early elections, or not getting a (parliamentary) majority in favour of the package would mean leaving the euro,' he said.
Mr Papandreou stopped short of formally announcing the referendum was scrapped, but Mr Venizelos was more clear.
'From what we have understood from the speech of the Prime Minister, the government and therefore the country, is officially announcing that it is not heading towards organising a referendum,' he said.
German Chancellor Angela Merkel reacted with caution.
'For us, it's actions that count,' Ms Merkel said in the southern French city of Cannes where leaders of the 20 top world economies were meeting for crisis talks on the eurozone debt woes.
'What's important is that there is a quick 'Yes' to the October 27 decisions,' she added, referring to last week's offer by eurozone leaders to write down Greek debt in exchange for imposing strict fiscal controls on Athens.
EU paymaster Ms Merkel reiterated her threat that the eight-billion euro pile of cash needed by mid-December would not be unlocked unless Greece accepted the terms of the bailout plan. In addition, EU President Herman van Rompuy and European Com-mission President José Manuel Barroso ratcheted up the pressure on Mr Papandreou, saying that Greece had to stick to the plan, agreed after marathon talks last week in Brussels.
'The euro area stands ready to continue to support Greece, but Greece needs to stick to the agreed package of October 26-27 and in particular to continue with the implementation of the EU/IMF programme.
“This needs to be crystal clear,' they said in a joint statement on the sidelines of the G20 summit.
Mr Papandreou's apparent change of heart came after the centre-right opposition indicated for the first time they would support the bailout plan.
'We had a dilemma – either true assent or a referendum. I said yesterday, if the assent were there, we would not need a referendum,' Papandreou told a crisis Cabinet meeting, according to a statement from his office.
'We must hail the fact that (main opposition party) New Democracy will vote for the loan deal.
New Democracy leader Antonis Samaras had previously been vehemently against the deal, which demands fierce austerity measures from the Greeks.