Greek Finance Minister Yanis Varoufakis has quit following the country's overwhelming referendum vote to reject the austerity terms demanded by its international creditors.
The leading figure in the negotiations with Greece's creditors said eurozone counterparts had made it clear they wanted him to go and Prime Minister Alexis Tsipras believed his exit would be "potentially helpful to him in reaching an agreement" in the coming days.
Greece's future in the EU is hanging in the balance with warnings that a new bailout deal is needed swiftly to avoid a catastrophic financial crash that could send it spinning out of the single currency.
The result of the referendum - with 61.3% voting No compared and 38.7% saying Yes on a turnout of62.5%- represented a sensational victory for radical left premier Mr Tsipras, who had gambled all on the outcome.
In a statement on his blog, Mr Varoufakis said the vote was a "unique moment when a small European nation rose up against debt-bondage".
He added: "Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted 'partners', for my ... 'absence' from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today.
"I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday's referendum.
"And I shall wear the creditors' loathing with pride."
German Chancellor Angela Merkel and French President Francois Hollande - the two biggest players in the eurozone - will meet in Paris for crisis talks ahead of a summit of leaders of the single currency bloc in Brussels tomorrow.
In London, Prime Minister David Cameron will chair a meeting with Chancellor George Osborne, Bank of England governor Mark Carney and other senior officials to assess the likely impact on the UK.
A Number 10 spokesman said: "The Greek people expressed a decisive view in yesterday's referendum. This is a critical moment in the economic crisis in Greece. We will continue to do whatever is necessary to protect our economic security at this uncertain time.
"We have already got contingency plans in place and later this morning the Prime Minister will chair a further meeting to review those plans in light of yesterday's result."
The Government has also issued travel advice for British tourists, warning that banking services, such as credit card purchase and cash withdrawals, could become limited at short notice.