Talks between socialist prime minister George Papandreou and opposition leader Antonis Samaras began on Monday and were continuing last night.
If the talks were to fail it could lead to a Greek election which would put the European bail-out package and the country’s place in the EU under threat, possibly triggering a wider economic crisis.
The two party leaders agreed over the weekend to forge an interim government that will shepherd the country’s new €130 billion European rescue package through parliament.
But Mr Papandreou, who was forced to withdraw a referendum on the bail-out package, is set to stand down in favour of another senior figure after the opposition said it could not work under him.
“I believe that we are now close to an agreement with New Democracy,” Mr Papandreou said, referring to Mr Samaras’ conservative party.