Mr Papandreou addressed members of his Pasok party in parliament
3 November 2011 Last updated at 19:35
Greek PM George Papandreou has said he is ready to drop a proposed referendum on the country’s eurozone bailout deal.
He said he had started talks to secure opposition support in parliament which would make the vote unnecessary.
His announcement of a referendum angered European leaders and sent shockwaves through its markets.
Facing calls for his resignation, Mr Papandreou called for unity in ruling party ranks ahead of a confidence vote on Friday. He has a thin majority.
But Finance Minister Evangelos Venizelos, addressing the Socialist Party (Pasok) MPs immediately after the prime minister, said Greece must say it was not holding a referendum.
He said Greece must do everything it can to reassure its international partners it will immediately implement the Eurozone bailout deal.
EU leaders say Greece cannot get bailout cash until it agrees the deal.
Responding to the recent developments in Greece, French President Nicolas Sarkozy said that after talks with Mr Papandreou on Wednesday there was more of a sense of urgency in the country.
“I think the message that was sent to the entire Greek political class yesterday by Germany and France together has helped in a sort of realisation of how things might develop and in Greece they have realised this,” he told reporters at the G20 summit in Cannes.
The opposition New Democracy leader Antonis Samaras called for a caretaker government and snap elections within six weeks, and for Mr Papandreou to stand down.
But the BBC’s Mark Lowen, in Athens, says that the prime minister is resisting the calls, hoping that if the threat of a referendum fades he can yet steer the country through the crisis.
‘Ready to talk’
The EU bailout, agreed last month, would give the heavily indebted Greek government 130bn euros (£111bn; $178bn) and it imposes a 50% write-off on private holders of Greek debts, in return for deeply unpopular austerity measures.
How Greek drama unfolded
0839: Mr Papandreou calls emergency cabinet meeting.
0844: Socialist (Pasok) MP Eva Kaili says she will not support government in Friday’s confidence vote.
0858: Pasok MP Dimitris Lintzeris calls on Mr Papandreou to resign.
1115: Senior Pasok MPs prepare proposal for coalition government.
1154: State TV says Mr Papandreou to visit President Karolos Papoulias, fuelling rumours he will resign.
1342: President’s office says it has no meeting scheduled with prime minister.
1512: Mr Papandreou says if opposition backs EU bailout deal in parliament, no referendum necessary.
1558: Mr Papandreou holds phone call with opposition leader Antonis Samaras.
1608: Mr Papandreou tells Pasok MPs Greece’s euro membership at stake in referendum.
1640: Finance Minister Evangelos Venizelos says Greece must abandon plans for referendum.
1800: Mr Samaras demands resignation of prime minister and snap election.
Mr Papandreou said the referendum on the deal was never an end in itself, and there were two other choices – an election, which he said would bankrupt the country, or a consensus in parliament.
“If we had a consensus we wouldn’t have to go to a referendum,” he said.
“If the opposition is willing to negotiate then we are ready to ratify this deal and implement it.”
He also welcomed Mr Samaras’ decision to drop the party’s previous opposition to the bailout package.
But Mr Papandreou said the government was not afraid of asking the Greek people in a referendum if necessary.
“The question is not whether to have a referendum or not but how to safeguard the decisions of 26 and 27 October,” he said.
Pasok holds a slim majority in parliament, 152 out of 300 seats, and the BBC’s Paul Moss in Athens says Friday’s confidence vote is a tricky prospect for the prime minister with some Pasok MPs still angry about his management of the crisis.
Mr Samaras earlier called for a caretaker government to safeguard the EU deal.
“I ask for the formation of a temporary transition government with the exclusive responsibility to immediately hold elections, and ratify the loan deal under the present parliament,” he said, quoted by AFP news agency.