Eurozone finance ministers have postponed a final decision on a €12bn loan to Greece until it introduces further austerity measures.
They said they expected to pay the latest tranche of a €110bn European Union and International Monetary Fund aid package by mid-July.
However, they added that it would depend on Greece passing €28bn of new spending cuts and economic reforms.
After meeting in Luxembourg, the ministers said they would seek what they called an informal and voluntary agreement by those owed money by Greece, such as banks, pension funds and insurers, to postpone repayment and avoid Greece defaulting.
'To move to the payment of the next tranche, we need to be sure that the Greek parliament will approve the confidence vote and support the programme, so the decision will be taken at the start of the month of July,' said Belgian Finance Minister Didier Reynders.
Greek Prime Minister George Papandreou has vowed to implement tough reforms demanded by international creditors and urged Europe to show the same will to help his debt-laden nation.
‘From our side I would like to say we are determined as a country, as a government to be on track with the programme, to move forward to do what is necessary in order to get our country into a fiscally much better and viable position,' he said after talks with EU Council president Herman Van Rompuy.
Mr Papandreou said he hoped the Greek parliament will approve a controversial austerity plan that eurozone states are demanding in exchange for the next bailout loan installment needed for Athens to avoid default.
'At the same time we do hope that the European Union will also have the similar will, a unity of purpose to not only support what Greece is doing, but also show the necessary strength for a crisis which has obviously not only reached Greek dimensions but a wider European dimension,' he said.
Minister for Finance Michael Noonan said he believes the EU will agree a plan for Greece that would not have adverse effects on Ireland.
Mr Papandreou has appealed to Greeks to support the deeply unpopular austerity reforms and avoid a catastrophic bankruptcy.
'The consequences of a violent bankruptcy or exit from the euro would be immediately catastrophic for households, the banks and the country's credibility,' he said.
Outside, more than 10,000 demonstrators protested - chanting: 'We won't pay! We won't pay.'
The EU Economic and Monetary Affairs Commissioner Olli Rehn said he believed that Athens will do what is necessary to avoid a default on its enormous debt.
The Greek parliament will vote tomorrow on a confidence motion on Mr Papandreou's new cabinet, which will have to oversee the latest planned austerity measures.
It has been confirmed that senior EU and IMF officials will travel to Greece tomorrow.
