Greek Bailout Deal Referendum Scrapped

Greece's Prime Minister has scrapped plans for a referendum on the eurozone bailout plan - telling Sky News he never wanted it to happen.

The surprise climbdown, confirmed by the country's finance minister, came after emergency talks in which the opposition party called for early elections and immediate approval of the rescue plan.

George Papandreou has since spoken to the Greek parliament, where he warned that rejecting the deal would signal the start of his country's exit from the eurozone.

The embattled leader has been under pressure to stand down - including a call to quit from the opposition leader - as a split emerged in his government over the plans to hold a public vote on the rescue package.

But Mr Papandreou has made it clear he was staying put, and invited opposition conservatives to join talks on the deal, which would see banks accept a 50% writedown of Greece's debt.

He warned against holding potentially "catastrophic" elections in the near future.

"The referendum was never an end in itself," George Papandreou earlier told the cabinet according to statements released by his office.

"We had a dilemma - either true assent or a referendum. I said yesterday, if the assent were there, we would not need a referendum."

Mr Papandreou also insisted he would never have put the question of whether Greece stays in the eurozone to a popular vote, as the leaders of France and Germany had suggested.

Markets across Europe rose strongly on Thursday afternoon, as investors realised the likelihood of a Greek referendum - and subsequent threat of a 'no' vote - was falling.

Professor Kevin Featherstone, an expert in contemporary Greek politics at the London School of Economics, told Sky News the referendum might be off but Mr Papandreou still faces the threat of a confidence vote on Friday.

"We've seen a number of his own party calling for him to go - a very unusual degree of dissent," he said.

"It must remain open whether he can win that vote of confidence or not."

He said the alternative idea of having some sort of coalition with Mr Papandreou at the helm was difficult to imagine, and early elections were likely.

He added that what Mr Papandreou had achieved was to force the opposition party to talk about accepting the bailout deal reached last week.

G20 leaders have started talks in Cannes, where the future of the eurozone bailout deal is dominating discussion.

The Greek finance minister Evangelos Venizelos earlier exposed a division within the Greek cabinet after he declared his opposition to hold a public vote on the bailout deal.

He said the country's attention should be focused on quickly getting a crucial £7bn installment of bailout funds - part of a package agreed last year - without which it faces bankruptcy with weeks.