Mr Papandreou said a vote of no-confidence will also be held on the deal.

The package envisages losses of up to 50% for private holders of Greek debt and a new Euro100 billion loan.

There have been large-scale protests in Greece against the austerity measures introduced by the government.

Mr Papandreou told a meeting of his governing Socialist party that the government trusted the judgement of Greek voters.

He set no date for the referendum, but indicated that it would be held after details of the deal have been finalised with the EU and the country's creditors.

Many Greeks believe the government has gone too far in allowing the EU and the International Monetary Fund (IMF) to dictate the austerity measures needed in order to secure the bailout.

Mr Papandreou has also faced growing dissent from within his own Socialist party over the impact of the austerity measures on the country.

The party's approval ratings have plunged and its parliamentary majority has been cut by several defections to other parties.

Analysts say the promise of a referendum allows Mr Papandreou's government, which has born the brunt of public anger over the austerity measures, to pass responsibility for the country's future to the Greek public.