Greece has reached agreement with the IMF and European Union on a rescue package for the debt-laden country, prime minister George Papandreou said today.

His government is set to announce later today harsh spending cuts through 2012 as part of the loan agreement worth some 120 billion euros.

Greeks would be called upon to make "great sacrifices" to avoid catastrophe, Mr Papandreou said in a live televised address.

Eurozone finance ministers have scheduled an emergency meeting later today and are expected to approve the EU's contribution.

Greek unions planning a general strike on Wednesday against the new cuts. Violent clashes broke out during anti-government protests at May 1 Labour Day rallies.

"I have done and will do everything not to let the country go bankrupt," Mr Papandreou said.

"We have convinced our partners that Greece's problem is not only ours. It concerns the functioning of the markets and the stability of the euro."

The prime minister said the measures will affect public sector pay and pensions but not the private sector, as had been widely feared. There will also be further hikes in consumer taxes, and deep cuts in defence spending and hospital procurement, he said.

The government will submit special emergency legislation to Parliament that was agreed upon with the EU and the IMF at Saturday's negotiating session. The Parliament is expected to approve the measures by Friday.