The Greek prime minister Lucas Papademos has postponed key crisis talks intended to shore up support for badly-needed austerity measures, defying mounting European pressure.
The prime minister's office has offered no official explanation for the delay.
However, a senior government official told Sky News that Mr Papademos' decision to push back talks with the leaders of his coalition government by a day was "not a setback".
"More time was simply required to iron out a final text of measures being drafted by the prime minister and team of visiting inspectors from the European Union and International Monetary Union," the official said.
He said the measures, which had been agreed to "in (their) overwhelming majority," would be given to the party leaders of Mr Papademos' coalition government for final review.
An agreement, the official said, "was expected well ahead of Thursday", when the Eurogroup convene.
It is the second time in as many days that Mr Papademos has moved to shore up the support of his socialist, conservative and far-right coalition partners as Greece's international lenders insist on a new rash of brutal budget cuts - including wage and pension cuts - in exchange for a proposed 130bn euro rescue package.
With Athens facing a 14.4bn euro bond redemption on March 20 - money this cash-strapped country does not have - failure to win cross party agreement today could push Greece closer to a messy default with global financial impact.
The delay follows a five-hour meeting the prime minister held on Sunday with the party leaders of his coalition agreeing on some "basic issues", including the need to press ahead with spending cuts of 1.5% of gross domestic product, or 3bn euros in 2012.
But, as talks heated up over what those cuts would entail, party leaders exited Maximus Mansion - the prime minister's office - with remarks which suggested a dangerous deadlock.
"They are asking for more recession," said main opposition New Democracy leader Antonis Samaras of the creditors' demands.
"I am fighting in every way to avoid this," he added.
The head of the small far-right Laos party, Georgios Karatzaferis, said he "will not contribute to a revolutionary explosion arising from impoverishment".
Eurozone ministers had hoped to meet on Monday to finalise details of the mammoth bailout, the second being patched together by the European Union and the International Monetary Fund.
However, patience with the Greeks is quickly waning.
Luxembourg's Prime Minister Jean Claude Juncker, who also chairs the eurozone's 17 finance minister group, warned of the dire repercussion Athens faced if it failed to meet lenders' demands for added austerity.
"If we should determine that everything is going wrong in Greece, then there would not be a new programme, then that would mean that in March a declaration of bankruptcy would occur," he said.
Pundits and politicians across the political spectrum have riled in response, accusing Europe (Chicago Options: ^REURUSD - news) and its top pay master, Germany, of blackmailing Greece, forcing it to wage even more brutal budget cuts as the sole cure for the country's debt woes.
"It is beyond clear that in a country in deep recession this particular policy mix of austerity is not working," Notis Mittarakis, a senior economy strategist with New Democracy said.
"It has failed."
Officials privy to the crisis talks told Sky News that party leaders and their teams were scrambling to find alternative cut backs that could meet or as one official put it "water down" creditors' demands for lower wages, salary and pension cuts on top of already 30 to 40% slashes sustained in the past two years.
"If these measures are adopted and the government does in fact cave into pressure, then workers will be faced with an armageddon," warned Thanos Vassilopoulous of Greece's biggest labour union GSEE.
"We must resist. We must revolt."
GSEE and Adedy, the civil servants union, have called for a 24-hour nationwide strike on Tuesday, warning of heightened strike action in response to added austerity.
32 comments