The government of Greek Prime Minister George Papandreou survived a confidence vote Friday, moments after the embattled leader signalled he'd be willing to step aside to help the country emerge from its unprecedented debt crisis.

Papandreou won the critical parliamentary confidence motion 153-145.

Earlier, Papandreou promised to start immediate power-sharing talks to form a caretaker government. He had warned snap elections would be a catastrophe for the country and would scuttle a major new European debt deal.

He said that elections would be held immediately after the financial situation is "normalized."

Finance Minister Evangelos Venizelos, who warned that the debt-ridden country still faced "mortal danger," said the new government would last until the end of February.

But main opposition leader Antonis Samaras, who had demanded Papandreou resign and a new government be formed that did not include members of any political party, called for snap elections.

He did not say whether his conservative party would join coalition talks, due to be formally launched later Saturday when Papandreou meets the country's president.

The confidence vote came days after Papandreou's ultimately scrapped plan to put the debt deal to a referendum sparked an open rebellion in the governing party, with deputies openly calling for him to step down.

Papandreou faced open revolt from some members of his own Socialist party ahead of the vote, a political free-for-all set off by a European bailout plan.

A week of unending drama in Athens has horrified the indebted country's European partners, spooked the markets and overshadowed the Group of 20 summit in the French resort of Cannes.

Papandreou on Thursday was forced to abandon his plan to hold a referendum on the debt deal, after markets and EU leaders reacted with hostility to the idea, sparking a global crisis as investors feared that rejection of the hard-fought agreement would force a disorderly Greek default.

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Papandreou's two-year-old government has a tenuous majority of two in the 300-seat assembly.

Earlier Friday, Finance Minister Evangelos Venizelos spoke by phone to an array of European officials  German Finance Minister Wolfgang Schaeuble, Jean-Claude Juncker who chairs the eurozone's 17 finance ministers, and EU's Monetary Affairs Commissioner Olli Rehn — to officially tell them the referendum is off.

He also said the aim of Friday's confidence vote was "to seek and achieve the broadest possible consensus and cooperation for the benefit of the country" — without giving further details.

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Conservative opposition leader Antonis Samaras wants the prime minister to step down immediately. ((Petros Giannakouris/Associated Press))

The new debt deal would give Greece a €130 billion ($179 billion US) rescue package — on top of the €110 billion ($152 billion) it was granted a year ago. It would also see banks write off 50  per cent of the money Greece owes them, some €100 billion ($138 billion). The goal is to reduce Greece's debts to the point where the country is able to handle its finances without relying on constant bailouts.

If the deal stalls, Greece will not get the next €8 billion ($11 billion) installment of its loans and will probably go bankrupt before the year is out.

 

The Socialists came to power in a landslide 2009 victory, and immediately discovered that, under the ousted conservatives, Greece had falsified financial data for years.