Europe keeps pressure to push forward austerity plan

"The cabinet approved the draft of the implementation law," a government official told reporters after a cabinet meeting.

The implementation law for Greece's austerity plan will be submitted to parliament on Friday and must be voted on by the end of the month in order to meet the deadline for the disbursement of the next round of EU-IMF funding, another government official said.

With thousands of demonstrators chanting insults outside, the government of Prime Minister George Papandreou survived a confidence vote early today and was due later in the day to approve new belt-tightening measures needed to free up more loans and avoid bankruptcy.

There was wide relief at the successful confidence vote but European leaders clearly want to keep the government's feet to the fire in the more difficult next stage – implementing reforms rejected by many of the population.

"There is no alternative. We have a plan, now it's time to act on it, it's time to implement it. There is no alternative. There is no Plan B," European Commission spokeswoman Pia Ahrenkilde-Hansen told a news conference.

Chancellor Angela Merkel, leader of EU paymaster Germany, said Greece must more aggressively privatize state-run firms and boost tax revenues. She said the confidence vote was an important step but Greece must now push through the reforms.

French government spokesman Francois Baroin said: "We will not accept any payment incident, or default."

Papandreou aims to get parliamentary approval for a package of spending cuts, tax hikes and state asset sales by June 28 and implement it by July 3 to secure 12 billion euros ($17 billion) in aid that is vital to avoid immediate bankruptcy.

But Slovak Prime Minister Iveta Radicova said Greece would struggle to pass the measures by the end of June. "I am afraid that, in the conditions as they are set today, it will be hardly possible to pass in the Greek parliament," she told reporters.

The confidence vote followed a European ultimatum linking release of the money –the next installment of a 110-billion-euro EU/IMF aid package – to a new five-year belt-tightening plan.

Without the aid, Athens would plunge into default next month, sending shock waves through the global financial system.

EU leaders meeting in Brussels tomorrow and Friday will discuss the next steps in supporting Greece although Merkel said she expected no concrete decision on more funding until Athens approved the package.

France said the Greek bailout was not on the agenda of the summit but a Greek official said it would be discussed over dinner.

The leaders are expected to make a political commitment to go on funding Athens for the next 12 months to convince the IMF to release the next tranche of loans in early July, once the fiscal package is implemented.