Greek socialist leader Evangelos Venizelos has said Greece will face a new general election after no deal was produced from talks to create a government.
The parties had been trying to stitch together an emergency administration to run the country after an election delivered no overall majority.
But the talks finally collapsed on Tuesday and the country will go to the polls again to break the deadlock.
"For God's sake, let's move towards something better and not something worse," Pasok leader Venizelos told reporters according to Reuters. "Our motherland can find its way, we will fight for it to find its way."
"We are going again towards elections, in a few days, under very bad conditions," Venizelos said.
Right-wing Independent Greeks Party leader Panos Kammenos, who won the election held nine days ago, said: "The pro-bailout parties would prefer a government which will further torment the Greek nation, rather than finding a solution."
The Greek left-wing Syriza party has said it will not join any coalition that supports a package of heavy austerity cuts - which are required by the IMF and the EU in order for Greece to receive a fresh package of bailout loans.
"We really believe that at this moment a possible exit of the Greek economy from the eurozone would have a very, very big cost for the eurozone as a whole," Gabriel Sakellaridis, Syriza's economic coordinator, told The Times.
President Karolos Papouliasis expected to form an interim government on Wednesday ahead of polls on either 10 June or 17 June.
It is thought the result of the new polls will be a rejection of new austerity cuts. The Syriza party is ahead in most recent polls, and if it won it would gain an automatic 50-seat boost in the parliament.
The euro fell to its lowest value since 18 January after the announcement, and shares in Greece also fell.
The latest failures have left markets spooked, leading to falls across Europe and Asia. Traders wiped £28.5bn from the value of London's leading shares index on Monday, and fresh falls were reported early on Tuesday.
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Meanwhile the latest round of weak economic data from Europe led to further worries for investors.
The eurozone avoided falling into recession, but economic growth was flat for the first three months of 2012.
Germany announced it had returned to growth, with a 0.5% rise in GDP, but across the eurozone that was offset by the French economy posting zero growth and Italian GDP falling by a steeper-than-expected 0.8%.
Despite pressure from incoming French president Francois Hollande to ease austerity and back growth, who was sworn into office on Tuesday, there remains no sign that Greece's partners are prepared to relax the terms of the bailout deals.
The European Commission insisted the austerity plan remained the best option.
A spokesman said: "This is the best thing for Greece, for the Greek people and for Europe as a whole. Nothing has changed in our position - we want Greece to stay in the euro, we think the Greek (austerity) programme is the best course for Greece."
Measures to boost growth are certain to be discussed at the G8 summit at Camp David in the US on Friday, where Hollande will meet German Chancellor Angela Merkel and British PM David Cameron for the first time.
Downing Street insisted any funding to stabilise Greece during the process of leaving the eurozone should be for the eurozone countries alone - just like bailouts for those inside the single currency bloc.
Deputy Prime Minister Nick Clegg warned eurosceptics against gloating over the plight of the euro.
He said: "We as a country depend massively on the prosperity of the eurozone for our own prosperity, which is why I can never understand people who engage in schadenfreude - handwringing satisfaction that things are going wrong in the euro."
Meanwhile Chancellor George Osborne warned that Britain's economy would be hit hard if Greece left the eurozone.
Uncertainty over the future of struggling eurozone nations was having a "real impact" on growth, he said.
Speaking in Brussels, where he is attending talks between European Union finance ministers over the continuing crisis, Osborne criticised the "open speculation" by some eurozone members.
"The eurozone crisis is very serious and it's having a real impact on economic growth across the European continent, including in Britain, and it's the uncertainty that's causing the damage," he said.
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Huffington Post UK | By Michael Rundle Posted: 15/05/2012 14:17 Updated: 15/05/2012 15:58