The eurozone must decide soon whether it wants to stay together or break-up, David Cameron has told MPs.
The comment comes amid frustration within government that Eurozone leaders have failed to tackle the crisis.
Bank of England governor Sir Mervyn King has warned the euro area poses the greatest threat to the UK recovery.
And on Monday Chancellor George Osborne said uncertainty over Greece's membership of the euro was damaging the whole European economy.
At Prime Minister's Questions in the Commons, David Cameron said the single currency area had a clear decision to make about its future.
'Make-up or break-up'
"The eurozone has to make a choice," he told MPs.
"It it wants to carry on as it is it has to build a proper firewall, it has to take steps to secure the weakest members or it has to work out it has to go in a different direction."
"It either has to make-up or it is looking at a potential break-up.
"That is the choice they have to make and it is a choice they can not long put off".
Deadlock in Athens over forming a new government and suggestions Greece may seek to water down previously agreed austerity measures have led to tension with Germany and talk of it exiting the euro.
Treasury sources have warned it would be "a dangerous delusion" for Eurozone countries to backtrack on deficit cuts.
Earlier on Wednesday, the Bank of England cut the UK's growth forecast for this year to 0.8% from 1.2%, saying the eurozone crisis was still the main threat to UK recovery.
Governor Sir Mervyn King said there was a "risk of a storm heading our way from the continent".
"Our biggest trading partner is tearing itself apart without any obvious sign of solution," he said. It would be foolish to think that the UK could navigate these problems "unscathed".
This echoes comments by Chancellor George Osborne on Monday, who said: "The British recovery has been damaged over the last two years by uncertainty in the euro and that uncertainty would be magnified were a country to leave.
"It is that uncertainty and not austerity that is doing real damage to the European recovery and indeed the British recovery."
But Labour said EU growth figures for the first quarter of the year - when it narrowly avoided going into the recession - showed the UK's recession was "made in Downing Street".
In the Commons, Labour leader Ed Miliband asked Mr Cameron what discussions he had had with new French President Francois Hollande on a growth plan for the continent.
He said it was "a shame" the prime minister had not meet Mr Hollande when he visited the UK a few months ago - when as the Socialist candidate for the presidency he met the Labour leader.
Mr Miliband added: "Europe needs a proper growth plan which this prime minister has failed to argue for. Britain needs a proper growth plan which he has failed to come up with.
"Business is pleading with the government for a growth plan."
The BBC's chief political correspondent Norman Smith says the Treasury wants Eurozone countries to agree to a package of measures including so called Euro bonds, re-capitalising struggling banks, a bigger bail out fund and structural reforms to improve productivity.