Prime Minister José Sócrates has said he will resign if the plan is defeated. He has said its rejection would force the debt-laden country to follow Greece and Ireland and seek an international bailout, which he opposes.

All opposition parties have proposed resolutions calling for the rejection of the measures, which reduce pensions and state spending.

The main opposition Social Democrats, who have previously backed austerity, have begun talking about a snap election.

"If all these positions that now seem irreversible are confirmed, then yes (the government will step down)," Francisco Assis, Socialist bench leader in parliament, told reporters after a late-night party meeting.

"The prime minister does not want to resign, but he cannot govern against his convictions," Assis said, blaming the Social Democrats for "opening a political crisis at the worst moment" despite the government's willingness to negotiate a solution.

The Socialists have 97 of parliament's 230 seats and have now no allies on whom they can rely. The plan needs at least 116 votes to pass.

A last-minute intervention by President Aníbal Cavaco Silva in the crisis appears less likely after he said late yesterday his "room for maneuver to act preventively" was limited.

The government had hoped to obtain support for its plan before the EU summit, which is expected to approve a beefed-up euro zone rescue fund.

Portuguese markets slumped on Thursday as investors grew more nervous.