Opposition leader Antonis Samaras also called for snap elections before leading his MPs in a dramatic walkout of parliament.

Mr Papandreou, whose government faced a crucial confidence vote on November 4, said that opposition support could mean dropping controversial plans for a referendum on an EU bailout.

He had faced a rebellion in his governing Socialist party (Pasok) over the proposed referendum, which sent markets into turmoil.

Mr Papandreou's party holds a tiny majority in parliament - 152 out of 300 seats.

Last week's hard-fought EU deal to bail out debt-ridden Greece was heralded as a breakthrough.

The EU bailout deal, agreed last month, would give the heavily indebted Greek government 130bn euros (£111bn; US$178bn) and it imposes a 50 percent write-off on private holders of Greek debts, in return for deeply unpopular austerity measures.

Analysts say eurozone leaders must solve the Greek problem swiftly or risk the crisis spreading to other vulnerable economies, particularly Italy.