The countries that use the euro have agreed to hand Greece €130 billion ($170 billion US) in additional bailout loans, according to an EU diplomat, in the hopes of staving off a default.
The official spoke to the Associated Press on condition of anonymity because a formal announcement was due.
Eurozone finance ministers reached the deal in Brussels early Tuesday morning, after more than 12 hours of negotiations.
The details have yet to be hammered out, but the new package of loans was expected to reduce Greece's debt to 120.5 per cent of its gross domestic product by the end of the decade. That's around the maximum that the International Monetary Fund and the eurozone considered sustainable.
The euro jumped 0.7 per cent to $1.328 US minutes after word spread that the ministers had struck a deal.
Greece needs the bailout money so it can move ahead with a related €100 billion ($130 billion) debt relief deal with private investors. That deal needs to be in place quickly if Athens is to avoid a disorderly default on a bond repayment on March 20.
French Finance Minister François Baroin had said Monday that "the elements are in place … both with the bankers, private sector creditors, and public sector creditors, the states and central banks" for the agreement to be reached.
The Greek parliament has faced down violent protests in Athens and nationwide strikes to approve the austerity and reform measures demanded by the eurozone. Its main political leaders have committed in writing to uphold the bailout terms even after general elections in April.
Greece's economy has been in recession for five years now, and there is doubt among investors that the country can ever live up to the financial commitments it has already made. But in the short term at least, world stock markets climbed Monday as hopes grew that the summit would be part of the solution.
And oil prices jumped to a nine-month high near $105 US a barrel after Iran said it halted crude exports to Britain and France in an escalation of a dispute over the Middle Eastern country's nuclear program.
To convince the rest of the eurozone that the new aid money won't be squandered, Greece is expected to be forced to set up a separate account that would ensure that it services its debt. This escrow account would give legal priority to debt and interest payments over paying for government services.
While eurozone ministers appear to have agreed on how to cut Greece's debt held by neighbouring countries, they are still discussing the losses that private bondholders will be asked to endure, media reports said Monday.
Greek government bonds are currently paying over 30 per cent, an unsustainable level that no country could endure for long, and a signal that investors have lost confidence in Greece's long-term future.