Thousands of Greeks are holding violent protests outside parliament in Athens as the House prepared to vote on  another round of swingeing austerity measures on its increasingly angry population, in return for fresh international aid.

police used tear gas on petrol bomb-throwing protesters outside parliament where lawmakers were debating a new austerity plan aimed at staving off bankruptcy. Police said some 25,000 protesters were massed outside the building and at nearby Omonia Square, with some 3,000 police deployed and more protesters arriving.

The vote is expected some time after midnight.

If Prime Minister Lucas Papademos gets his way, the country's deputies will authorise him to agree the cuts required to obtain a second massive bail-out from the EU and IMF, to the tune of 130 billion euros ($171 billion).

But they also have to approve moves to recapitalise Greek banks, which may involve a degree of nationalisation if they cannot get sufficient private money.

And they must back a bond swap which, after long and tortuous negotiations, has finally been agreed with private creditors.

That is designed to wipe out around 100 billion euros from Greece's 350 billion euro debt, reducing the country's massive debt burden to 120 percent of GDP.

If deputies reject the package however, Greece will not get the money it needs to stave off bankruptcy on March 20, when it has to repay nearly 14.5 billion euros in maturing debt.

The head of the International Finance Institute (IIF), Charles Dallaras, urged Greek lawmakers to pass the painful austerity measures demanded by creditors.

"I want to encourage them to vote. My voice is a very small part of this process, but it is very important for the MPs to understand what is at stake and to recognise that beyond austerity, which is part of the long-term dimension of this program, there are many tangible benefits for Greece and the Greek people," Dallaras said in an interview to Kathimerini newspaper on Sunday.

"Austerity, of course, will continue. But we are moving towards another situation where the benefits I mentioned will start being felt, such as capital inflow, which will gradually give an end to uncertainty," Dallaras, who is the chief representative in the private debt discussions added.

Papademos on Saturday warned of "economic and social catastrophe" if the Parliament does not pass the austerity measures.

Hours after thousands of protestors, watched over by riot police, demonstrated in Athens against the further belt tightening, Papademos insisted that the alternative, a default, was far worse.

"The Greek parliament is asked to take a historic responsibility, examine and authorize the new economic programme of Greece, the pre-condition for financing the country over the coming years," he said.

The two parties in the ruling coalition, the conservatives and the socialists of PASOK back the package -- though two socialist junior ministers and four members of the far-right LAOS party quit the cabinet in protest.

But the proposed austerity measures drawn up to make the cuts required by the European Union and the International Monetary Fund will heap more hardship on ordinary Greeks already suffering from the crisis.

They involve a 22-percent cut in the minimum wage (32 percent for anyone under 25); deregulating the labour market to make it easier to lay off workers; and a package of tax and pensions reforms that have provoked a wave of protest.

The country's unions have called a fresh protest on Sunday in front of the Greek parliament to protest what they say is the blackmail being imposed by the international troika of the EU, the IMF and the European Central Bank.

Papademos said in a televised address late yesterday that MPs faced a "historic responsibility".

In his address, Papademos spelled out the consequences if deputies refused to bite the bullet and approve the fresh package of cuts.

"The social cost of this programme is limited in comparison with the economic and social catastrophe that would follow if we did not adopt it," he said.

The state would be unable to pay salaries, pensions or even maintain basic services such as hospitals and schools, he warned.

And in a speech on Friday, he spelled out the consequences of a default.

"It would create conditions of uncontrolled economic chaos and social explosion... sooner or later, (Greece) would be led out of the euro," he warned.