Commission welcomes fresh Greek austerity measures

"Greece's ambitious programme to correct its fiscal imbalances is now on track," he added.

Athens presented its budgetary plan - known as a 'stability programme' - to the commission in January, in which it pledged to reduce its budget deficit by four percent of GDP in 2010.

After a three-hour cabinet meeting on Wednesday morning, Greek government spokesman Giorgos Petalotis said the agreed new measures amounted to €4.8 billion, split between €2.4 billion in new revenues and €2.4 billion in spending cuts.

They include a dramatic 30 percent cut in the holiday bonuses of Greek civil servants.

The plans also include a 12 percent cut on other civil servant bonuses, a freeze on all pensions, a 2 percent rise in the VAT rate to 21 percent and a 20 percent increase in the tax on alcohol and tobacco, as well as an 8 cent-a-litre increase in the price of petrol.

There are also plans for a tax rise on luxury goods such as expensive cars.

A change of government in Athens last October, and subsequent upward revisal of the country's budget deficit figure for 2009 to 12.7 percent of GDP, shocked EU member states and financial markets, prompting a flight from the country's bond market and a weakening of the euro currency.

Since then the centre-left Pasok administration has struggled to convince markets it is capable of tackling the country's spiraling debt problem, with a EU monitoring mission to Greece last week warning austerity measures announced thus far would only reduce the budget deficit by two percent this year.

Bailout details in return?

In return for the fresh austerity measures, Greece is hoping for greater details of a bailout plan to be made public, a step which Athens argues will bring down its borrowing costs. Euro area states have so far resisted however.

"The time of Europe has come. We've done whatever we need to, Europe must do the same," Prime Minister George Papandreou reportedly told ministers during the cabinet meeting.

Greek hopes have recently centered on a meeting between Mr Papandreou and German chancellor Angela Merkel this Friday, but a German official said on Wednesday that Berlin would not offer financial aid to Greece at the meeting.

"The talks between the chancellor and the prime minister are not, in terms of content, for making any aid commitments," a German government spokesman said at a regular news conference.