Greek pleas for a bailout extension have been rejected by eurozone finance ministers, fuelling fears the nation will crash out of the single currency.
The financial assistance package in place to help the failing economy will end as planned on Tuesday - the day Greece must make a debt repayment of 1.6 billion euro (£1.1 billion) to the International Monetary Fund.
Eurozone ministers criticised Greek prime minister Alexis Tsipras for announcing that a snap referendum on bailout proposals will be staged next week.
The left-wing Syriza leader said proposals put forward by international creditors would place "unbearable" burdens on the Greek people and the government will now campaign for a "No" vote.
Finance ministers in the bloc, however, said creditors had put forward a "comprehensive" proposal to break the deadlock.
In a statement after talks in Brussels, the group added: "Regrettably, despite efforts at all levels and full support of the Eurogroup, this proposal has been rejected by the Greek authorities who broke off the programme negotiations late on the 26 June unilaterally.
"The Eurogroup recalls the significant financial transfers and support provided to Greece over the last years. The Eurogroup has been open until the very last moment to further support the Greek people through a continued growth-oriented programme.
"The Eurogroup takes note of the decision of the Greek government to put forward a proposal to call for a referendum, which is expected to take place on Sunday July 5, which is after the expiration of the programme period."
If Greece fails to meet its debt repayment it will be declared in default, pushing it towards the exit door of the single currency.
Jeroen Dijsselbloem, president of the Eurogroup of finance ministers for the currency zone, said Greece had closed the door on a solution to the crisis.
The Dutch finance minister said: "I am very disappointed. After our last meeting, the door on our side was still open, but that door has closed on the Greek side."
Greeks flocked to cash machines across the country to withdraw money after the referendum announcement was made
Greek finance minister Yanis Varoufakis said the government wanted to let voters decide.
"We received 36% of the vote. For a momentous decision of this nature we felt the need to secure 50%+1," he said.