Greek political leaders clinched a long-stalled deal today on harsh austerity measures and reforms required to secure a second international bailout in two years but the country's financial backers reacted sceptically.

European Union partners and the International Monetary Fund have been exasperated by a string of broken promises and weeks of wrangling over the terms of a €130 billion bailout, with time running out to avoid a chaotic default.

Finance ministers of the 17-nation euro zone arriving for talks in Brussels warned there would be no immediate green light for the rescue package and said Athens must prove itself first.

"It's up to the Greek government to provide concrete actions through legislation and other actions to convince its European partners that a second programme can be made to work," EU Economic and Monetary Affairs Commissioner Olli Rehn said.

German finance minister Wolfgang Schaeuble told reporters: "You don't need to wait around because there will be no decision (tonight)."

Greek finance minister Evangelos Venizelos flew to Brussels after all-night talks involving prime minister Lucas Papademos, leaders of the three coalition parties and chief EU and IMF inspectors left one sensitive issue - pension cuts - unresolved.

A final €300 million gap was bridged today in talks with the troika of the European Commission, the European Central Bank and the IMF, and endorsed by the party leaders.

The euro and European stocks rose briefly on the news, which appeared to remove - at least for now - the risk of a hard default by the euro zone's most indebted country, facing a major bond redemption deadline on March 20th.

The risk premium investors charge for holding Italian, Spanish and Belgian bonds fell."We need now the political endorsement of the Eurogroup for the final steps," Mr Venizelos told reporters.

But several ministers arriving for the meeting made clear they wanted firmer guarantees and practical action first.

"Greece has to implement what it has not implemented from the first programme before we can decide on a second," Germany's Mr Schaeuble said. Mr Venizelos said Athens also had an outline deal with private creditors on a bond swap in which they would give up some 70 per cent of the value of their Greek bond holdings, reducing Athens' €350 billion debt pile by about €100 billion.

ECB president Mario Draghi said he was "quite confident" that all the components of a Greek debt deal would fall into place and hinted the central bank could provide indirect help without breaching a treaty ban on financing governments.

An IMF spokesman called the agreement "an important initial step" but said IMF managing director Christine Lagarde would seek assurances that Greece would stick to the agreed policies whatever the outcome of a general election likely in April.

The measures will mean a big fall in the living standards of many Greeks, now in the fifth year of a deep recession.

Deputy labour minister Yannis Koutsoukos, a socialist, resigned over a package he said would be "painful for working people".

Greece's two major labour unions called a 48-hour strike for tomorrow and Saturday against the reforms.

"The painful measures that create misery for the youth, the unemployed and pensioners do not leave us much room," secretary general of the ADEDY union, Ilias Iliopoulos, said.

"We won't accept them. There will be a social uprising."