Cyprus has reportedly agreed a deal on a controversial bank deposit levy with the European Union and the International Monetary Fund.

A senior Cypriot official told Reuters that a 20% levy would be imposed on deposits over €100,000 at Bank of Cyprus and a 4% levy on deposits of the same amount at other banks.

The official also said a Cypriot proposal to tap nationalised pension funds would not be part of a plan to raise the €5.8bn the EU wants in return for a €10bn bailout.

Troika officials could not be reached for comment.

Meanwhile, several thousand bank employees marched through the centre of Nicosia to protest against the expected austerity measures.

The protesters passed the presidential office in Nicosia, before heading to the finance ministry building.

Earlier, Finance Minister Michael Sarris said "significant progress" had been made in talks in Nicosia with officials from the EU, IMF and European Central Bank.

Cyprus faces a Monday deadline to clinch a bailout deal with the EU or the ECB says it will cut off emergency cash to the country's over-sized and stricken banks.

The country's president Nicos Anastasiades is expected in Brussels tomorrow to meet EU leaders.

These will include European Council President Herman Van Rompuy and Commission President José Manuel Barroso, as well as IMF Managing Director Christine Lagarde and ECB President Mario Draghi.

Mr Van Rompuy and Mr Barroso cancelled a planned EU-Japan summit in Tokyo to tend to the Cyprus saga.

The 17 eurozone finance ministers will also meet in Brussels tomorrow evening to discuss the rescue package.

Elsewhere, European Economic and Monetary Affairs Commissioner Olli Rehn said Cyprus faces a very difficult near-term future and must take hard decisions, with no perfect solution available.

Mr Rehn said the European Commission was working hard to bring about a solution to help Cyprus and that it was essential that eurozone finance ministers reached an agreement on a rescue deal.

"Unfortunately, the events of recent days have led to a situation where there are no longer any optimal solutions available. Today, there are only hard choices left," Mr Rehn said.