The European Central Bank faced an acute new phase in the eurozone debt crisis today, with pressure rising for it to resume purchases of government debt to ease market pressure on Italy and Spain.

The ECB held its key interest rate at 1.50 per cent and the Bank of England kept its rate at 0.50 percent, a few hours after the Bank of Japan held its rate unchanged between zero and 0.1 per cent.

But a sharp turn for the worse in the eurozone's debt crisis, with the European Commission warning that it is now hitting at the heart of the single currency, has greatly raised the stakes over whether or not the ECB will resume buying bonds until a new crisis fund can take over the task.

"A revival of the ECB's securities markets programme (SMP) is the only real option that would prevent a liquidity crisis for Spain and Italy," Goldman Sachs economist Dirk Schumacher said.

The ECB suspended its bond purchases more than 18 weeks ago because they forced the bank to shoulder a greater amount of the risk which ECB president Jean-Claude Trichet insists should be borne by the governments.

Markets now want to see if a worsening of the crisis will see Trichet signal that he is ready to resume the programme.

"Everyone is focused on the possibility of an intervention," Deutsche Bank senior economist Gilles Moec told AFP after the rate decision was announced.

"Expectations are a bit too high from this point of view," he added.

Traders have sent yields and risk premiums on Italian and Spanish bonds to record highs in recent days in what could be the start of a grave extension of the eurozone debt crisis to its third and fourth-biggest economies.

European Commission president Jose Manuel Barroso urged today in a letter to all 27 European Union leaders "a rapid re-assessment" of how to resolve the situation.

"It is clear that we are no longer managing a crisis just in the euro-area periphery," Barroso warned.

Leading Italian trade unions and the main employers group presented Prime Minister Silvio Berlusconi with ways to boost economic growth at talks aimed at shoring up market confidence.

But Barclays Capital economist Julian Callow noted that "the sums and commitment (required from the ECB) over the next few weeks (so as to have) a credible impact on bond market spreads would be very substantial" given the amount of Italian and Spanish bonds issued.

"While we hope that the ECB will spring a positive surprise and announce bond purchases, we put the chances of that at no more than 25 percent," Berenberg Bank chief economist Holger Schmieding added.

"At least they can send a message to say that this cannot carry on and there will be measures taken," urged Angel de Molina Rodriguez at the Spanish brokerage Tressis.

Moec felt a "verbal intervention" was likely but he did not expect SMP bond purchases to resume soon, estimating that a critical "pain threshold" had probably not been reached yet.

Citi Economics analyst Willem Buiter said that a fear-driven withdrawal of market funding could drive countries into insolvency.

"It follows ... that the ECB will have to come in or accept a couple of fundamentally unwarranted large sovereign defaults and the biggest banking crisis since 1931," he warned.

The task of buying eurozone government debt to keep bond markets under control is to be shouldered by a eurozone crisis fund known as the European Financial Stability Facility.

Final details must still be worked out however and eurozone members must then give their approval, a process that could take months.

That measure is part of a broader eurozone plan that includes a a second rescue package for Greece and backstops for Ireland, Italy, Portugal and Spain and banks in those countries.

Meanwhile, the ECB faces other problems, notably an economy that has deteriorated rapidly since last month when Trichet hinted that the central bank might hike rates again to curb inflation now at 2.5 percent, well above the target of just under 2.0 percent.

Recent data has shown that previously robust core eurozone economies are slowing quickly and many economists think the ECB will delay a rate hike they had expected in October.

"We are in for a fairly long pause," Moec forecast.