9 November 2011 Last updated at 05:51 ET

New Greek coalition 'to be announced on Wednesday'

Prime Minister George Papandreou has agreed to step down

The make-up of Greece's interim government will be announced later on Wednesday, a government official says.

The announcement came as talks dragged into a third day without any apparent sign of progress.

The official said PM George Papandreou, who has agreed to step down, would meet the president in the morning before talks with party leaders.

Greece is under mounting pressure from Europe to end its political crisis and pass a key bailout package.

'Affirm commitment'

Negotiations have been taking place between Mr Papandreou and Antonis Samaras, leader of the largest opposition party New Democracy, since Monday.

It is unclear whether any agreement was made during talks on Tuesday, with some reports suggesting leaders remain undecided on who will lead the new coalition.

Reports also suggested Mr Samaras was balking at eurozone demands for a written commitment to the fiscal targets and measures demanded by the country's lenders.

Analysis

Mark Lowen BBC News, Athens

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A deal was close. Then it was off. Now it is unclear where we stand. The wrangling here is paralysing the country. "Sinking without a captain," reads one headline today. Why the delay?

One sticking point is the reluctance of the opposition leader, Antonis Samaras, to accept an EU demand to sign a document committing his party to the latest vital bailout package. He says he will back it, but seems to be held back by some of his MPs who oppose the austerity demanded in return for the deal.

And then Lucas Papademos, previously considered the frontrunner, is said to want more control over naming ministers. He apparently feels that the 100-day period envisaged for this government is too short.

So new names are being touted and Greece watches and waits. Without political stability here, there can be no resolution of the debt crisis. Greeks are losing patience.

Lucas Papademos, a former vice-president of the European Central Bank (ECB), was widely seen as the front-runner to replace Mr Papandreou, but there are unconfirmed reports his candidacy has run into trouble.

"The Papademos candidacy has hit problems that have to do with both parties," one of the sources told Reuters, on condition of anonymity.

Other possible candidates named in the Greek media include Nikiforos Diamandouros, Greece's European ombudsman, and Panagiotis Roumeliotis, Greece's representative to the International Monetary Fund (IMF).

On Wednesday the Athens News named another possible contender - Ioannis Koukiadis, a law professor and former Pasok labour minister.

Finance Minister Evangelos Venizelos - for a time considered to be a candidate - is expected to remain at the finance ministry.

Greece's European partners are pressing for a swift resolution.

Eurozone chief Jean-Claude Juncker has said the leaders of the two main parties must co-sign a letter reaffirming their commitment to the programme of bailouts and economic reforms before the next tranche from the first bailout - worth 8bn euros (£6.8bn; $11bn) - is handed over to Athens. Without it, Greece will run out of money within weeks.

Last month, EU leaders agreed a separate bailout deal which gives the government 130bn euros (£111bn; $178bn) and imposes a 50% write-off on private holders of Greek debts, in return for deeply unpopular austerity measures.

What next for Greece?

• Wednesday: Talks to continue, with details of unity government expected to be announced
• Within a week: Coalition sworn in and confidence vote held; the new coalition must win parliamentary approval for the EU bailout plan before calling early elections
• Mid-December: Greece would receive next tranche of bail-out money
• 19 February: Possible date for early election

• Should we feel sorry for Greece?

The agreement was however thrown into doubt after Mr Papandreou declared that he would hold a referendum on the deal, saying the Greek people should have a say.

The announcement however sparked intense criticism and he was forced to retract the idea.

On Sunday, as the fallout continued, he agreed to stand down and for a transitional government to be set up.

The first steps in forming the new government were finally announced after late-night talks on Sunday between the two men, hosted by President Karolos Papoulias.

Greece's new political roadmap envisages elections being held - possibly on 19 February - once the new government has approved an EU bailout package.