Protesters have surrounded the Greek parliament in Athens, as MPs prepare to vote in favour of austerity measures designed to avoid a sovereign default and possible ejection from the euro.

Greece's prime minister Lukas Papademos is hoping to push though €3.3bn (£2.76bn) of public spending cuts viewed by eurozone nations such as Germany as necessary before they agree to further financing.

In a television address on Saturday he said that the the agreement would decide the country's future. "We are just a breath away from ground zero," he said.

The measures have proved deeply unpopular with many Greeks, and up to 40,000 demonstrators clashed with police as the midnight vote drew near.

Police have fired tear gas at the crowds while protesters have set fire to buildings and hurled petrol bombs and stones back at officers in the city's central Syntagma Square.