9.03pm: Developments seem to have ground to a halt, after another remarkable day. So we're closing this blog down.

As usual, we're delighted by the hundreds of comments. Sorry for the technical issues which we suffered earlier -- the new functionality (the ability to respond to specific posts) is a Good Thing. Great to see you using it.

Here's a round-up of the key events.

• George Papandreou has abandoned his plan to hold a referendum, amid scenes of open warfare in his own party. Finance minister Evangelos Venizelos forced the move in an early-morning speech, saying Greece's eurozone membership was too important to risk.
• Opposition leaders are resisting Papandreou's efforts to create a caretaker government of national unity. They are calling for his resignation instead.
• Vote of confidence will still take place on Friday night. Papandreou may quit even if he wins
• The European Central Bank surprised the markets - by cutting interest rates to 1.25%
• In Cannes: G20 leaders have pledged to prevent the eurozone breaking up. Read more in Andrew Sparrow's live blog.

Good night!

8.54pm: Helena Smith has been working her contacts in Athens - and confirmed that George Papandreou could indeed quit if he wins Friday night's confidence vote.

A government minister indicated that Papandreou has agreed this deal, under pressure from arch rival Venizelos.

8.20pm: The latest rumour doing the rounds is that Papandeou is considering stepping aside if he wins Friday's confidence vote.

From Reuters:

Greek Prime Minister George Papandreou has struck a deal with ministers to step down and hand power to a negotiated coalition government if they help him win a confidence vote on Friday, government sources with knowledge of a cabinet meeting said.

They said the ministers involved in the deal were led by Finance Minister Evangelos Venizelos.

"He was told that he must leave calmy in order to save his party," one source told Reuters on condition of anonymity. "He agreed to step down. It was very civilized, with no acrimony.

George Papandreou addresses the Greek parliament. Photograph: Mega TV

8.07pm: Papandreou appears to be telling the parliament that talks with the opposition 'must start now'.

That's the same opposition who demanded his immediate resignation two hours ago.

7.53pm: You can watch Papandreou's speech live here (no translation though)

This is Papandreou's first contribution to the vote of confidence debate which began yesterday, and will climax on Friday night with the actual vote.

7.52pm: Heads-up -- George Papandreou is now addressing the Athens parliament.....

7.14pm: Trying to understand the ramifications of today's twists and turns in the eurozone crisis? Me too! Fortunately we have Larry Elliott to guide us.

From Cannes, our economics editor explains that Europe's leaders are haunted by the threat of a new downturn just as bad, or worse, than that which began three years ago:

We have been here before. As battle-hardened veterans of the panic of 2008 were quick to point out, early November 2011 has started to look frighteningly like mid-September 2008. It is not just that a policy error – George Papandreou's decision to pursue a referendum – has triggered financial market mayhem, although it has. Nor is it just that there has been a deluge of bad news. It is the inescapable sense that policymakers have lost control of the situation and now fear for the worst.

You can read it all here: Eurozone crisis: policymakers fear worst after losing control

6.29pm: So, instead of backing Papandreou's call for national unity, New Democracy want his resignation. Early elections suddenly look much more likely -- especially as New Democracy's MPs have just walked out of the parliamentary chamber en masse.

Samaras's point, it seems, is that he is prepared to back a unity government - but only one that ratifies last week's deal, and calls immediate elections. Not a longer-term coalition government Papandreou had in mind.

6.21pm: Antonis Samaras is speaking to the Greek parliament now - and calling for Papandreou's immediate resignation.

There's an excellent write-up of Samaras's speech here, written by Philip Atticus of Navigator Consulting.

Samaras was heckled by MPs from the ruling Pasok party when he told the parliament that he had actually agreed to the conditions of Greece's latest bailout on October 27th (the Pasok deputies questioned why we only learned this today).

Samaras, though, continued to savage Papandreou:

Mr Papandreou lies with an unbelievable ease. He told us that he informed the European leaders about the referendum. They denied this in Cannes.

6.05pm: In New York the traders are back from lunch - if they ever left - and all the US markets are up. The Dow is now over 12000 again for the
first time since the Greek's threatened to derail the Euro bailout.

The FTSE 100 closed 61 points higher while Papandreous was speaking, a rise of 1.12%.

The City remains a rather uncomfortable place tonight, though. As David Jones of IG Index said:

Despite the volatility that we saw in August it feels like many years since we have had this level of sheer confusion in markets.

5.39pm: George Osborne, speaking at the G20 meeting in Cannes, has insisted that European leaders can solve the crisis.

Here's the key quote, (via Andrew Sparrow's live blog, straight from Cannes):

There is no doubt that there is a real sense of urgency in the room and a real sense of urgency from every individual that I have heard. There was also an emphasis on the need for specific actions to come out of our discussion ... The eurozone has taken significant decisions.

The question that people have is are they willing to implement those decisions. The message that we are getting here from the eurozone leaders in Cannes is that they are

.

Osborne declined to comment on the Greek situation directly, calling it "pretty fluid". He's absolutely right about that.

5.36pm: What happens now? The next major event would appear to be tomorrow night's confidence vote. We are now watching to see whether any Pasok deputies indicate whether they still plan to support Papandreou....

5.10pm: Here's a quick summary of the key points from those two speeches (leaving aside the prime minister's attacks on his European colleagues):

• George Papandreou has not resigned. Instead, he hopes to reach a deal with New Democracy, the main opposition group, to get last week's bailout deal approved
• New Democracy is being offered the chance to 'co-negotiate' Greece's next programme of measures - it is not clear if they will accept
• The referendum, which sparked this week's crisis, is off the table.
• Greece has enough cash to last until 15 December - it needs the €8bn aid tranche by then

Greek Prime Minister George Papandreou gestures as he addresses the socialist party parliamentary group in Athens Photograph: Louisa Gouliamaki/AFP/Getty Images

4.56pm: Venizelos also attempted to assure Greeks panicked by the dramatic turn of events that the "banking system in this country is absolutely safe" -- highlighting fears of a run on the banks.

Local media are highlighting the fact that Venizelos says Greece has 42 days of cash reserves left ... previously officials, clearly in a bargaining tactic, had said the country would run our of money by November 10

4.45pm: Now Evangelos Venizelos, who torpedoed Papandreou's plans this morning, is speaking.

Venizelos is laying down the law to Pasok. He's the deputy leader, but he sounds more like the main man right now.

His first point is that Greece must do everything it can to reassure its partners that it will fulfil its obligations. His second point - "Greece must say that it is not holding the referendum". This is important, as Papandreou spent part of his speech justifying the referendum idea.

Venizelos continues to warn the assembled deputies that Greece needs the next slice of aid, worth €8bn, before December 15.

Greek Finance Minister Evangelos Venizelos stands behind a door during a cabinet meeting in Athens Photograph: Aris Messinis/AFP/Getty Images

He also says that the legislation bringing the new bailout deal into law ought to be passed by at least 180 of Greece's 300 MPs. For that, Papandreou really would need New Democracy's support, as his support dwindled to 151 today.

4.39pm: OK, Papandreou has finally come to the point. He is reaching out to the opposition, specifically New Democracy, and hopes to reach a deal under which Greece fulfils its obligations - and gets its second bailout.

He says that the government will ask New Democracy to "jointly negotiate" the new bailout deal. Early elections would be 'catastrophic', he says, but Friday's vote of confidence goes ahead.

This is the key quote from Papandreou:

New Democracy has announced that it will vote for the new loan agreement and I would like them to come as co-negotiators for the new programme

With a consensus we would not have to to go to a referendum. if the opposition is willing to negotiate then we are ready to ratify this deal and implement it."

As David Gow explains, Papandreou's message could be boiled down to "Ensure I win tomorrow's vote of confidence, then ratify the October 26/27 summit decisions and negotiate the fine details of the deal under national emergency conditions.

Papandreou finishes the speech, and his MPs applaud - not terribly enthusiastically, but at least no-one threw a shoe at him.

4.33pm: Another remarkable quote from Papandreou:

We are bearing a cross and, on top of that, they are throwing stones at us.

4.28pm: Papandreou turns his attention to the planned referendum, which we believe has now been consigned to history (or perhaps ignominy):

Again, he blames his European partners....

I believe deeply in democracy, the values inherent in democracy, and when I announced the referendum ... our partners wanted everything to go like clock-work, to work robot like .... if we can't respond to our commitment the issue of the euro will be on the cards.

The decision of the referendum would be a guarantee of us staying in the eurozone. What is of priority is not the referendum but whether as a country we are willing to enforce the commitments [outlined] in the October 26 agreement.

I told our partners that if we had political consensus, if we could vote through the rescue package [with the main opposition party] there would be no need for other solutions.

4.20pm: Papandreou is also saying that Greece has stared catastrophe in the face.

We got a small taste, fortunately a small one but a taste nonetheless, of what saving the country means and what not saving the country would have meant.

The speech is being delivered in complete silence - no applause or other supportive noises.

4.18pm: Papandreou calls the deal agreed in Brussels last week a 'landmark' moment for Greece.

Papandreou goes on to criticise some of his fellow European leaders for the way they have treated Greece:

"It is clear that we have lived through scenes as a country that we didn't deserve and harmed us." he says slamming the way Merkel and Sarkozy publicly humiliated him during emergency talks in Cannes last night "telling us how to hold our referendum, defining the rules ..."

4.11pm: Papandreou pays tribute to the fortitude showed by the Greek people since the crisis began:

The sacrifices Greeks have made have not been lost. Every day they are helping to build new foundations for our country .. I don't know if there are other societies that could withstand to take on such a burden in such a short space of time.

4.05pm: You can watch Papandreou's speech live here on Mega TV's web site (it's in Greek, but the body language isn't hard to translate).

4.01pm: Papandreou has begun his speech (which Helena is watching and translating for us). He has not lost his famous composure but looks very pale. Assembled members of the Pasok party could not look more glum.

Papandreou has just told deputies that:

George Papandreou addresses his socialist party . Photograph: Mega TV

For the last two years we have waged a battle of Titanic proportions .... our first duty being to fend off bankruptcy, to prevent the country collapsing ... we were a guinea pig, a developed country in a monetary union experiencing all this.

It is quite clear that this is his swansong ....

3.55pm: Papandreou's speech is just beginning, as most of Greece (and beyond) wait to hear what he will say.

Helena Smith watched Papandreou stride into the marble-walled chamber where the meeting will take place, greeting MPs with a weak smile. She says:

There was none of the usual cheers and hand-clapping as he walked into the room. Papandreou has made clear that he will not step down, insiders say, until a transitional government is formed.

3.49pm: Mega TV is now reporting that Papandreou has telephoned Samaras and told him that the country now needs to have a unity government.

3.30pm: Another indication that the Greece political landscape is being reshaped:

Giorgos Karatzerferis who heads the populist far-right LOAS party has just said: "very shortly we will have a government of national unity."

Helena also reports that Papandreou is about to address his parliamentary group -- we may soon have more developments...

3.24pm: Peace may be breaking out in Greece. Greek TV is now reporting that Papandreou has praised his rival Antonis Samaras for changing his political tune and deciding to support the rescue package crafted by the EU and IMF to stave off Greece's economic collapse.

The Greek leader is being cited as telling cabinet ministers that Samaras' new stance is a "huge success." Papandreou reportedly said that:

A logical order has been reached. I am very happy and praise Mr Samaras for his change of mind.

A historic moment has been reached where political parties can understand each other, can reach consensus.

We're not immediately sure that Papandreou should be bandying around terms like 'huge success' after this week's shenanigans....

3.08pm: Helena Smith has been analysing the latest developments, after a quite remarkable few hours. She says that:

Through all the political high drama it would seem that Angela Merkel and Nicholas Sarkozy have succeeded in achieving their goal: to get the latest rescue package for Greece -- a deal that will see private investors accepting to write off 50 percent of the value of their Greek bond holdings -- endorsed by the country's two main parties.

Lack of political consensus for the bitter pill of austerity that Greece has to swallow has been a major concern of both the EU and IMF.

Greek Prime Minister George Papandreou Photograph: Lionel Bonaventure/AFP/Getty Images

Meanwhile, David Gow reports that some Greek firms happily continued doing business today, while others were shut:

Round the corner from my hotel, the municipal market has been turning its back on the crisis all day, with stalls doing brisk trade. But all the shops close by on Athinas Street, displaying their wares on the pot-holed pavement, are and have been empty. Not a single customer in sight. The cafes and restaurants, however, are loud and lively.

But the real feelings of younger Greeks have been shown by a waiter bringing coffee to my room: "I'm 30 and all my friends have left already and I'll be the next to go. There's no hope, it's all gone, the country is bankrupt. My friends, even the ones with two young children, have gone overseas - to Austria, Switzerland. Do they speak German? Yes, so do I, my father worked for Heidelberg Druck..I'm lucky I learned to speak it."

2.55pm: Time for a summary, while the situation in Greece is relatively clear:

• The plan for a referendum on Greece's membership of the eurozone has been cancelled. Prime minister admits to cabinet that it cannot go ahead.
• There is now growing acceptance that a National Unity government may need to be created. But it is unclear if the New Democracy opposition will agree.
• UK admits that it may have to pay more into the IMF to support financial recovery. David Cameron says it's the right thing to do
• Finance minister Evangelos Venizelos forces PM's hand in early morning speech. Eurozone membership too important, he said
• European Central Bank cuts interest rates. Mario Draghi lowers borrowing costs to 1.25%

2.43pm: Further confirmation that the Greek referendum is off, via Helena.

Kostas Yeitonas, a veteran member of Pasok, has just explained that two major things have happened since the morning:

"Papandreou has taken a step back and said he won't hold the referendum," he told Mega TV. "And Antonis Samaras has agreed to support the rescue package, which is a very good one for us, in parliament. He, too, has taken a step back."

Samaras had previously slammed the debt deal for "condemning Greece to deeper recession."

2.22pm: Breaking news from Athens -- leaks from the cabinet meeting show that Papandreou has acknowledged that he can't hold the referendum, as exiting the eurozone would endanger Greece's future. Friday night's vote of confidence is still going ahead, though (it appears).

Instead, Papandreou's party could now negotiate with the New Democracy opposition over the creation of a Government of National Unity (which is also being dubbed a Salvation Government).

Helena Smith has the details:

Papandreou, while willing to form a government of national unity that would include the main opposition conservative party New Democracy, is still insisting on the confidence vote going ahead tomorrow night.

Greek TV stations are reporting that the beleaguered leader is about to dispatch some of his senior lieutenants to ND's party HQ to negotiate the creation of a unity government. Yiannis Michelakis, the party's spokesman, has just told Mega TV that if formed the administration would be "transitional" and would have one priority -- to ratify the debt deal that has triggered this latest phase of the crisis.

Early elections would then be held.

More (as ever) when we get it.

1.49pm: Latest word from Athens is that Papandreou may not be visiting the presidential palace this afternoon after all. The President's Office says that there is "no planned meeting" at the present time.

That suggests that Papandreou has not been toppled - last we heard, he was still locked in talks with his own party.

Faisal Islam, Economics Editor, C4 News, is in Athens. His sources say that Papandreou offered to resign, leading to the creation of a government of national unity with the New Democracy party. They, though, have declined.

We're trying not to read too much into the various rumours, and apparently authoritative reports flying around.

As Faisal is physically standing outside the presidential palace, I trust him when he tweets that the Greek President is JUST about to leave his mansion.

1.23pm: My colleagues in Athens are stationed in a cafe within spitting distance of protest-scarred finance ministry - epicentre of the latest political turmoil. They report that:

Outside the parliament, up the road, there are huge numbers of cars toing and froing with the odd angry screaming fits from older men on mopeds. Greeks around us are arguing volubly about the humiliating language of Merkozy last night which has united the entire country in rage.

1.13pm: The surprise cut in eurozone interest rates by "Super Mario" Draghi has sent stock markets rallying across Europe - despite the continued uncertainty over whether Greek prime minister George Papandreou is about to resign (his political office are currently denying that he has).

The FTSE 100 jumped to a 66-point gain (to 5547), while the Italian stock market jumped almost 4%. My colleague Katie Allen has more details here.

Wall Street correspondent Dominic Rushe says that :

With about 15 minutes until the US stock markets open the Dow looks like its going to open up again with futures up 1.29%. News from Europe will no doubt dominate the day but markets also have some home news to absorb.

Jobs figures this morning point to a gradual improvement in US employment. Initial jobless claims fell by 9,000 to a seasonally adjusted 397,000 the week ended Oct. 29, the Labor Department said.

The latest non-farm pay roll numbers and the most up-to-date unemployment figure will be released tomorrow. Unemployment is still expected to be around 9.1% but the signs are growing that the jobs market is finally on the mend.

While "non-farm pay roll" may sound a bit quaint, tomorrow's data will certainly be important. It's a crucial measure of the health of the US, and thus the global economy.

12.49pm: More eurozone drama - the European Central Bank has cut interest rates across the currency union. The cost of borrowing is coming down to 1.25%, from 1.5% previously. Most city economists expected no 'change', despite a widespread belief that the ECB was wrong to raise rates twice this year.

What a way for Mario Draghi to start his term as ECB president....

12.44pm: While we eagerly await news from Greece, David Cameron has been discussing the eurozone crisis in Brussels.

He confirmed that Britain could increase its contributions to the International Monetary Fund (as Mark Hoban told parliament this morning).

Let's be clear. When the world is in crisis, it's right that you consider boosting the IMF - an organisation founded by Britain, in which we're a leading player. No government ever lost money by lending money to the IMF, which supports countries right around the world.

More on Andrew Sparrow's live blog from the G20 meeting.

12.29pm: There is huge confusion, and a sense of rising panic, in Greece.

Talk of George Papandreou's resignation "within the next" hour are just one of the many scenarios circulating in an atmosphere of "great confusion. One suggestion is that senior banker Lucas Papademos., a former vice-president of the European Central Bank, could take over.

Helena Smith says there is a rising sense of panic with the entire politicial leadership saying the debt-stricken country is now staring "bankruptcy" in the face amid calls across the board for elections to be held immediately.

Greek Finance Minister Evangelos Venizelos. Photograph: John Kolesidis/Reuters

Helena has also been speaking to the Greek public. The atmosphere is as electric on the streets as it is in the chamber, with Greeks expressing disbelief at the dramatic turn of events.

"Guillotines should be erected outside parliament," said Aristides Raptis, a fruitseller in Syntagma Square where the parliament building is located. He added:

They have all brought us to this point of catastrophe. We are bankrupt. We are destroyed. The only way out is elections. A new leadership for our country.

12.07pm: Reports are breaking in Athens now that George Papandreou is set to meet with the country's president within the hour.

Greek Mega TV claims that following a meeting of his parliamentary group after his cabinet session, the embattled leader will soon visit the president, Helena Smith tells me. This is probably to ask the president to dissolve the government and call early elections.

But seperately, the BBC is reporting that Papandreou plan is to step aside and make way for a new coalition government to take over.

Helena says that the cabinet meeting was delayed as Papandreou held "crisis talks in his parliamentary office" to discuss the bleak options he now faces.

More as we get it.

11.44am: The UK City minister, Mark Hoban, is answering an urgent question about the eurozone crisis in the House of Commons.

My colleague Jill Treanor has the key points:

• Prime minister David Cameron will give a statement to the house on Monday
• UK is prepared to put more money in to the IMF but only if the extra resources are targeted at countries with reform programmes - and not for the SPIV that the eurozone is creating to increase the fire power of its bailout fund
• Hoban also told the House the UK deserved credit for "getting ahead of the curve" in terms of austerity measures to keep the UK's borrowing costs closer to Germany than Greece

But, there is also no doubt about the "chilling effect" (Hoban's words) the eurozone is having on economies here and globally.

The Prime Minister and Chancellor will use the meeting in Cannes to urge Europe to find a solution (presumably without another stand-up row between David Cameron and Sarkozy)

11.25am: The crucial emergency Greek cabinet meeting has started (later than scheduled). George Papandreou's political survival both as prime minister and head of the Pasok party will be determined by the cabinet meeting.

MPs have been telling reporters that they will listen to Papandreou's report from his meeting in Cannes last night before they "made up their minds" as to whether to back him in Friday's confidence motion.

The veteran socialist Telemachos Hytiris said Papandreou should now assemble a government of national unity with the purpose of ratifying last week's EU/IMF bailout for the country and then call early elections:

The time has come for everyone, first and foremost Goerge Papandreou, to assume their responsibilities.

11.14am: After an early wobble, financial markets are rallying as traders calculate that the Greek referendum will not happen. Most European stock markets are now slightly higher.

Joshua Raymond, chief market strategist at City Index, says many investors are standing on the sidelines for safety as the situation changes by the hour:

The markets started to find some support and recovered from their earlier woes on news that Mr Papandreou had called an emergency cabinet meeting amidst speculation that he was losing support from his own party and could call for a snap election, an election which could put any referendum to bed and may result in a new stronger coalition government being formed.

10.40am: Our economics editor Larry Elliott has analysed the state of the crisis gripping the eurozone.

This is now a game being played with the highest of stakes. Megaphone diplomacy is now the order of the day, with the ultimatum from Sarkozy and Merkel serving to ratchet up the tension.

Economists at bodies such as the Organisation for Economic Co-operation and Development and the International Monetary Fund have already downgraded their forecasts in anticipation of a European recession caused by the "muddling through" strategy of the past two years.Now they are being forced to model what would happen in the event of a disorderly Greek exit from the euro, with the inevitable knock-on effects that would have.

A successful outcome to the crisis – a quick resolution to Greece and an immediate reduction of the tension on Italy and Spain – is highly unlikely. The UK thinktank the National Institute for Economic and Social Research has come up with a number of alternative scenarios: muddling through, default contagion and a Greek exit from the euro. None of them will be remotely pleasant.

You can read Larry's full piece here.

10.30am: Barack Obama has warned that resolving the European debt crisis is the most important issue facing world leaders.

Speaking at the G20 summit in Cannes, the US president told a press conference that America remained a loyal partner to Europe - despite speculation that Obama is unhappy that the latest Greek drama is overshadowing such an important summit.

Here are the G20 we are going to have to flesh out more of the details about how the commitments are going to be fully and decisively implemented.

Andrew Sparrow has more coverage of Obama's remarks in his live blog here.

10.14am: Crossing briefly from Greece to Italy. Silvio Berlusconi is fighting for his own political survival today. The comparisons with Papandreou's situation are fascinating -- as Berlusconi too is locked in battle with his finance minister.

This follows crunch talks yesterday in which the Italian government agreed to ramp up its austerity plans - but not by as much as some had hoped.

Tom Kington in Rome has the full story:

After a late-night cabinet meeting on Wednesday, Silvio Berlusconi put together a list of measures to help stimulate the Italian economy that will be inserted as amendments into a bill – now in the Italian Senate – which contains this summer's austerity programme.

No details of the new measures were officially released by the government and no press conference was held. Italian media reported that full scale labour market reforms were absent, although measures making it easier to fire state staff and incentives to firms to hire women and young applicants were included.

Tax breaks for infrastructure companies and the sell off of state property were also included in the programme, which has been hurriedly hashed together to please EU leaders and stave off pressure from the markets.

Reports of the cabinet meeting depicted continuing friction between Berlusconi and treasury minister Giulio Tremonti, who allegedly told the prime minister that only his resignation would pull Italy off the front line in the EU debt crisis.

President Giorgio Napolitano has meanwhile been meeting opposition politicians, possibly with an eye to obtaining consensus on forming a new, technical government should Berlusconi's MPs continue to defect, prompting the loss of confidence vote next week after he returns from the G20 conference.

The premier's popularity has meanwhile dropped to 22%, a new poll revealed on Wednesday.

In addition, a front page editorial in leading newspaper Corriere della Sera today points to the worsening behaviour of the surreally uncouth Umberto Bossi, Berlusconi's crucial ally.

After regularly threatening journalists recently, Bossi blew a raspberry at them yesterday when asked if the technical government was likely.

As Corriere della Sera put it:

Apart from the growing vulgarity of his reactions, it is emblematic of a centre-right which knows that the Berlusconi era is ending.

9.56am: The G20 meeting of world leaders has now begun. My colleague Andrew Sparrow is covering events his live blog here, so do follow that for all the latest developments in Cannes.

Although the current Greece crisis is dominating the summit, a lot of other important issues will be discussed. That includes a "mini eurozone summit" where France, Germany, Spain and Italy will discuss the wider economic turmoil.

I'll be mainly sticking to events in Greece, the financial reaction, and the debt crisis in this blog (although there's inevitably going to be some overlap).

9.41am: One of George Papandreou's international political supporters has rallied to his side.

The President of the Party of European Socialists (PES), Poul Nyrup Rasmussen issued a statement of support saying "everyone" should respect the right of Greeks to "express their will freely in the referendum" having made extreme "sacrifices" already.

The frustration and anger that they have caused in Greek society has built up like a pressure cooker ... What is crucial now is for all of Europe to weigh in behind Mr. Papandreou to make sure that this referendum is a success.

Helena Smith points out that Papandreou, a globalist par excellence, is president of Socialist International, the global group of left wing parties.

9.27am: Papandreou's grip in power appears to be slipping.

Helena Smith writes from Athens that:

Venizelos is holding "crisis talks" with various cabinet members at his sixth floor office in the finance ministry. Politicial developments are expected to move fast. What is sure is that there is no love lost between Venizelos and the beleaguered Greek prime minister George Papandreou who he challenged for the leadership of the Pasok socialist party in 2007.

The finance minister's decision to voice his opposition to the referendum at 4:45 AM not only highlights Papandreou's increasingly perilous position but how determined Venizelos is to make his own position clear.

Greek media are reporting that the finance minister attempted, as he sat next to Papandreou flying back from Cannes, to persuade him to drop the plebiscite plan after the humiliating grilling both men were subjected to in Cannes. Interestingly, Pasok cadres who have most vociferously opposed the ballot on the EU's latest rescue plan for Greece are all aligned to Venizelos (Venizelists) with at least one now publicly saying they will not give Papandreou the vote of confidence he has called Friday night.

9.12am: Another member of prime minister George Papandreou's ruling party has called for his resignation today.

Speaking to reporters at the Athens parliament, Dimitris Lintzeris - a socialist deputy - said:

The prime minister must set in motion constitutional and party procedures for smooth political developments. He belongs to the past.

Reuters points out that Lintzeris has previously lobbied for a government of national unity, but this is the first time he has demanded the PM steps down.

However (in the confusing world of Greek politics), it is not clear that Lintzeris will necessarily vote against the government in Friday night's confidence ballot.

If Lintzeris does not break ranks on Friday night, Papandreou should have 151 of the 300 MPs on side.

9.01am: You can read the full statement that Evangelos Venizelos delivered early this morning here.

In it, he insists that the vital issue is that Greece gets the financial help it needs now:

The country must feel safe and stable and that is the first requirement in order for it to be truly safe and stable. Greek banks are totally secure, as an integral part of the European banking system.

This was apparent last night from the discussion in Cannes. What is important is for the sixth tranche to be disbursed, without any distractions or delay, according to the decisions of Eurogroup of October 26, which came as a result of 10 hours of hard negotiations.

8.45am: Just hearing that Greek prime minister George Papandreou has called an emergency cabinet meeting for 10am GMT (noon local time in Athens).

That follows reports that he may have now lost his majority in the Greek parliament.

One Pasok MP does appear to have defected this morning - which would take Papandreou down to a majority of just 1.

Eva Kaili wrote to the Greek parliamentary speaker to say that she would not support Papandreou in Friday night's confidence vote. The letter states:

Herewith I inform you that I am not resigning as an elected representative of my fellow citizens and my generation, but in Friday's vote I will not cast a vote of confidence in your government.

Other MPs have been calling for the referendum plan to be ditched....

8.30am: Alarm bells are flashing in the bond markets, where Italian debt has fallen in value this morning.

This has driven up the yield, or interest rate, on Italian ten-year bonds up to 6.35% - up 0.137 percentage points (that's a much larger move that we'd see on a 'normal day').

That reflects the political uncertainty in Italy, where Silvio Berlusconi is battling for his political survival.

Elsewhere in the financial world, European stock markets have fallen in early trading. Sharp early losses in France where the CAC shed 2.6%, while the German DAX is 2.2% lower.

In the City the sell-off is more muted -- the FTSE 100 is down 41 points at 5442 - down 0.8%.

Harley Salt, head of sales trading at IG Markets, said the Greek crisis and G20 meeting in Cannes were dominating the City:

Greece remains very much at the top of the agenda for financial markets across the world after crisis meetings were held in Cannes last night ahead of the G20 conference that gets underway in the next few hours.

It seems clear that Greece is intent on pursuing its plans for a referendum and even if this process can be accelerated to be held in early December, it does mean that aid payments have now been suspended.

Once again the prospect of the euro losing its first member is very much in play.

8.01am: The decision by finance minister Evangelos Venizelos to publicly oppose a vote on euro membership has brought the divisions at the heart of the Greek government into the open.

As my colleague David Gow reports from Athens:

The Greek political crisis has intensified this morning with glaring new evidence of a split between George Papandreou, the premier, and his finance minister and would-be successor Evangelos Venizelos.

Venizelos made his move fresh off the plane from Cannes where the pair were given a roasting last night by Merkozy and other EU/IMF leaders.

This is yet another bombshell dropped on the country as Papandreou seeks a confidence vote tomorrow night. Victory is hanging by a thread as members of his ruling socialist party, Pasok, defect and his majority slumps to two.

There have been rumours of a cabinet split during Tuesday's marathon seven-hour sitting but this brings it right into the open.

It's been a busy week for Venizelos -- on Tuesday he checked into a clinic with 'stomach pains', and insiders have revealed that he was not consulted about Papandreou's shock decision to call for a referendum.

7.45am: Good morning, as the Greek debt crisis continues to escalate.

Greek finance minister Evangelos Venizelos appears to have broken ranks this morning, insisting that the country's membership of the eurozone must not be risked in a referendum.

In a statement, Venizelos warned that:

Greece's position within the euro area is a historic conquest of the country that cannot be put in doubt.

This acquis by the Greek people cannot depend on a referendum.

However, with European leaders insisting that any vote must be about membership of the euro itself, and George Papandreou still refusing to name the question, the picture is as murky as ever.

With €8bn of Greek aid at stake, stock markets are likely to suffer fresh losses this morning.

In Athens, the debate over the vital vote of confidence scheduled for Friday night continues.

The European crisis is also dominating the G20 Summit in Cannes, where world leaders are gathered. We'll be focusing on Greek issues in this blog today - although there's clearly going to be overlap.