Eurozone finance ministers have finally sealed a deal for a second bailout of Greece, leaving the debt-laden nation facing increased financial monitoring and deep cuts.
The 130bn euro (£110bn) rescue deal, which comes with strict conditions, was agreed in the early hours of Tuesday morning following a marathon 13 hours of talks.
"It's no exaggeration to say that today is a historic day for the Greek economy," Greek Prime Minister Lucas Papademos said.
EU economic affairs commissioner Olli Rehn said: "It is a far-reaching and important agreement which will substantially reduce the debt burden of Greece and help to reform the economy and go towards creating jobs."
The deal includes "an enhanced and permanent" surveillance presence in Athens by the so-called Troika to observe implementation of promised reforms.
"The Greek economy cannot rely on a large public sector," Mr Rehn warned.
The programme aims to cut the struggling country's debts to 120.5% of gross domestic product (GDP) by 2020. Greek debt currently sits at around 160% of GDP.
The deal, which ends months of uncertainty and aims to avert a Greek default, was welcomed by European leaders.
Chancellor George Osborne told Sky News the deal was "very encouraging for the whole European economy."
He added: "Resolving the Greek situation is only part of the resolving the eurozone crisis, but we took a really significant step towards that last night.
"Resolving the eurozone crisis would be the biggest boost that Britain could get for the economy this year."
The deal came after haggling over figures, financial targets and Greek government belt-tightening pledges that dragged on through the night in Brussels .
It was a last-ditch attempt to rally markets and put crisis-hit Greece back on the path to economic recovery and growth.
International Monetary Fund boss Christine Lagarde said she would address the IMF board in the second week of March about the deal.
"I personally welcome the agreement that has been reached," she said.
Jose Manuel Barroso, president of the European Commission, said the bailout was the right move for Greece and for the rest of the eurozone.
He added that Greece had no choice but to implement its austerity programme if it wanted to be competitive.
The deal is based on long-range forecasts of Greece's best-case-scenario debt reduction chances over the next eight years, with some pundits instantly dismissing the deal as undeliverable.
In return for the rescue package and a private creditor debt write-off worth around 107bn euros (£89bn), the Greek government made major reform pledges.
These include a promise to fully implement a severe austerity package of pay, pension and jobs cuts, as well as finding savings of 325m euros (£270m) in this year's national budget.
Reforms have been hugely unpopular with the Greek population, provoking violence and riots in Athens.
Implementation of the deal is seen as an important step in reducing risk of a Greek monetary union exit, amid fears of currency chaos across the 17 eurozone states.
Greece desperately needed the rescue package agreement to avoid a calamitous default next month when a 14.5bn euro bond issue comes due.
European markets reacted cautiously to the deal.
Movements were muted as investors remained wary that even though Greece was out of the woods for now, Greece's general election, due in April, might bring in a new government unwilling to implement the harsh austerity measures.
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