Greece says it has agreed a deal with the European Union and IMF to rescue the nation's embattled economy.
Prime Minister George Papandreou said the country would have to make "great sacrifices" to avoid bankruptcy.
The value of the rescue deal will be announced later. Details of the austerity cuts agreed in return for loans have been revealed.
There are fears that Greece's debt crisis could spread to other countries using the European single currency.
On Saturday, police again clashed with demonstrators in Athens who were protesting against government measures.
'Evident' anger
European finance ministers will gather in Brussels later on Sunday and are expected to approve the bail-out, which is which is designed to prevent Greece from defaulting on its enormous debt.
The rescue package is expected to amount to as much as 120bn euros (£100bn; $160bn) over three years.
In return the Greek government will unveil a fresh round of sweeping efficiencies, expected to include further tax rises and deeper cuts in pensions and public service pay.
Mr Papandreou told a televised cabinet meeting that active and retired public sector workers would bear the brunt of the new wave of budget cuts.
"With our decision today our citizens will have to make great sacrifices," he said, describing public anger at the new wave of cutbacks as "evident".
"Our national red line is to avoid bankruptcy," Mr Papandreou said, adding that "no-one could have imagined" the size of the debt that the previous government, which left office last year, had left behind.
'No easy path'
The austerity measures include:
- Fresh budget cuts of 30bn euros over three years - with the aim of cutting its public deficit to less than 3% of GDP by 2014. It currently stands at 13.6%
- Scrapping bonus payments for public sector workers
- Banning increases in public sector salaries and pensions for at least three years
- Increasing VAT, currently at 21%
- Taxing illegal construction
Finance minister George Papaconstantinou said Greece had been called on to make a "basic choice between collapse or salvation".
New emergency legislation authorising the cuts and tax rises is now being drafted and is due to be put before parliament for approval by the end of the week.
European Commission President Jose Manuel Barroso said that Greece had committed to "a difficult but necessary reform process to put the Greek economy on a sustainable path and restore confidence" saying the package of austerity measures promised was "solid and credible".
This rescue would "be decisive to help Greece bring its economy back on track and preserve the stability of the Euro area", he added.
Finance Minister George Papaconstantinou will head to Brussels later for an special gathering of the 15 other eurozone finance ministers.
The eurozone countries are speeding up rescue efforts for Greece amid fears its debt crisis could pull down other members - with particular concerns having been raised about Portugal, Spain and Ireland.
German Chancellor Angela Merkel said that the deep cuts imposed on Greece in return for the rescue would spur other troubled eurozone to do all they could to avoid the same fate.
"These countries can see that the path taken by Greece with the IMF is not an easy one. As a result they will do all they can to avoid this themselves," Mrs Merkel told the Bild am Sonntag newspaper.
During Saturday's clash between demonstrators and police at the finance ministry in the capital a state TV truck was petrol-bombed and a prominent hotel was vandalised in the central Syntagma square.
Thousands of Greeks took part in May Day rallies called by trade unions and left-wing parties. Protesters hurled bottles and rocks and fought running battles with police in riot gear.
Our correspondent says the unions hope the rallies will demonstrate to the government, the eurozone, the IMF and the international markets, that they can mobilise enough people to defeat the new austerity programme.
The BBC's Malcolm Brabant in Athens says the latest study of Greek attitudes shows most people are angry and dismayed about the bail-out, because they do not feel responsible for causing the crisis.
Greece's economy is still deep in recession and on Sunday the government forecast that GDP would fall by 4% in 2010.
Its debt - currently at about 115% of GDP would rise to 149% by 2013 before falling, it added.
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