Portugal's government has said that a court's rejection of austerity measures had left the country facing "serious difficulties in terms of fulfilling the international commitments and budget objectives".
The Constitutional Court ruled that unpopular pay cuts in this year's state budget are unlawful, denying the government about €1.4bn of predicted revenue.
It delivers a setback to the austerity strategy agreed between ministers and foreign creditors, who bailed Portugal out two years ago with a deal worth €78bn.
"The government does not agree with the interpretation of the constitution made by the constitutional court about some of the measures included in the 2013 state budget," Luis Marques Guedes, Secretary of State of the Presidency of the Council of Ministers, told reporters after a Cabinet meeting in Lisbon.
"The decision taken by the constitutional court has left the country facing serious difficulties in terms of fulfilling the international commitments and budget objectives."
The 13 judges said in a statement that budget measures cutting holiday pay for government workers and pensioners, and others reducing unemployment and sickness benefit, were unconstitutional.
Among the reasons for the decision were that the measures neglected guarantees of equality.
Private sector workers are not subject to the measures.
Friday's court decision came ahead of an informal meeting of eurozone finance ministers in Dublin next week.
Marques Guedes said that Portugal had been working towards it, with the aim of "reaching an agreement with European partners".
"An agreement necessary to obtain extensions for the country's loan maturities, and for a successful completion of the adjustment programme [bailout] in 2014," he added.