German Chancellor Angela Merkel pledged on Tuesday to offer Greece "all necessary assistance" in overcoming its debt crisis, but said the Greek government must fully implement all its planned austerity measures.

"Through the euro, we are closely bound together, and the weakness of one affects us all," Merkel said at a news conference with Greek Prime Minister George Papandreou.

Their meeting was being closely watched by financial markets in the hope they were preparing a comprehensive solution to the European debt crisis, but neither Merkel or Papandreou announced any new measures ahead of their private dinner at Berlin's chancellery on Tuesday evening.


Greek Prime Minister George Papandreou met Tuesday with German Chancellor Angela Merkel. ((Dimitri Messinis/Associated Press))

Germany, Europe's biggest economy, is seen as a key player in resolving the 17-nation euro zone's debt crisis, but Merkel's government has repeatedly been accused over the past 18 months of being a reluctant leader of the rescue efforts.

Speaking alongside her Economy Minister Philip Roesler earlier Tuesday, Merkel reiterated her conviction that there is no quick solution, saying the crisis must be dealt with "step by step."

Greece must receive an €8 billion ($11 billion Cdn) rescue loan before mid-October to stave off bankruptcy, a collapse that would send shock waves through markets around the world.

But creditors have demanded more efforts to raise revenue.

In response, Greek lawmakers approved a controversial new property tax Tuesday evening, passing it 154-143 in the 300-member parliament.

Finance minister says bailout will happen

Greek Finance Minister Evangelos Venizelos said his country will get the money.

"The disbursement will be decided in time, in line with the course of our funding needs," he said.

Speaking over chants from protesting ministry employees and tax office workers outside his department in Athens, Venizelos said Greece had made great efforts to achieve its fiscal targets, but that a "hyper-effort" is necessary to fully meet its commitments.

Venizelos said representatives from the International Monetary Fund, the European Commission and the European Central Bank will return to Athens this week.

The so-called troika suspended its review in early September amid talk of missed targets and budget shortfalls.

"We want a strong Greece within the eurozone, and Germany is prepared to offer all necessary assistance," Merkel said.

Papandreou, in return, pledged to implement the reforms demanded by Greece's international creditors, adding that "we hope that we can manage a primary budget surplus already in 2012."

Speaking through a translator, he said: "Those are times of great sacrifices for the Greek people. Therefore it is of great importance to receive signals of support from our European partners."