Eurozone leaders meeting in Brussels have backed a mechanism to help Greece tackle its debt crisis that has threatened the euro.

The rescue mechanism will only be a last resort if Greece finds it impossible to borrow money in the financial markets.

The rescue package involves bilateral loans and money from the International Monetary Fund.

The deal potentially draws to a close weeks of uncertainty caused by speculation on the currency markets.

If the European Commission and the European Central Bank approve, the emergency loans will flow to Greece, but they must also be approved unanimously by all eurozone members.

They will provide the greater part of the funds, on a voluntary basis, while the IMF will make up the rest.

The loans will not be as expensive for Greece as they currently are, but they will not be cheap either.

Government sources said Ireland would be willing to pay its share on the basis of solidarity, but also on condition that this was a loan with attractive interest rates so there would be no effective cost to the Exchequer.

Greek Prime Minister George Papandreou has hailed the rescue package.

He said: 'Europe has taken a step forward ... Europe and Greece will emerge stronger from this crisis.

'It's a very satisfactory decision which will put in place a European mechanism with the involvement of the International Monetary Fund to guarantee the financial stability of the eurozone.

European Central Bank President Jean-Claude Trichet said the mechanism is workable but unlikely ever to be activated.

He said: 'I am extraordinarily happy that the government of the euro area found a workable solution.

'I am confident that the mechanism will normally not need to be activated and that Greece will progressively regain the confidence of the market.'