Greek PM George Papandreou makes farewell address

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Media captionPrime Minister George Papandreou: "Our country will be stronger and more secure"

Outgoing Greek Prime Minister George Papandreou has made his farewell address to the nation, pledging to keep Greece in the euro and respect the terms of the EU bailout deal.

Greece's political parties have been holding three days of talks to hammer out details of a unity government.

Mr Papandreou gave no indication of who his successor might be but said a new government had now been agreed.

Without the bailout, Greece risks bankruptcy and an exit from the euro.

Under the terms of the deal, Greece must enact further austerity measures in return for a bailout of 130bn euros (£111bn; $178bn) and a write-off of half the Greek debt held by private lenders.

Mr Papandreou is now meeting President Carolos Papoulios, and is expected to formally tender his resignation.

However, the deal on the new government appears to have hit a snag. The BBC understands the smallest party in the proposed coalition, Laos, has walked out of the talks with the president and the two other parties, Mr Papandreou's centre-left Pasok party and New Democracy, on the centre-right.

The name of the new prime minister was due to be announced after the meeting and a new government sworn in on Wednesday night.

Names in the frame

In his address, Mr Papandreou said: "In the next few months, we will do whatever is required, not only to remain in the euro but to take advantage of the benefits of the agreement of 26-27 October [the EU bailout deal]."

He also said the new government would tackle tax evasion and bring greater transparency to the public finances.

But he did not say who his successor might be.

"It was obvious that in order to achieve this historic agreement, we would have to find a person who had everyone's support," Mr Papandreou said. "I believe this choice is very important. My role would never be an obstacle to this national unity."

A number of candidates have been mentioned to be the potential new prime minister:

  • Former European Central Bank vice-president Lucas Papademos was an early frontrunner but later reports suggested his candidacy had run into trouble
  • Vassileios Skouris, president of the European Court of Justice
  • Parliamentary speaker Philippos Petsalnikos, who is also a former justice minister
  • Law professor Ioannis Koukiadis, a former Socialist labour minister, was named by the newspaper Athens News as a possible contender
  • EU ombudsman Nikiforos Diamandouros
  • Panagiotis Roumeliotis, Greece's representative to the International Monetary Fund (IMF)

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

Adding to the uncertainty, Mr Samaras became embroiled in a row with the EU over Greece's pending bailout programme.

EU economic affairs commissioner Olli Rehn said he wanted the heads of Greece's two main parties to commit in writing to the terms of the bailouts before Athens could receive the next instalment.

But Mr Samaras balked at the idea, saying he regarded the rescue deal as "inevitable" but saw no need for a written pledge.

Greece needs the next tranche from the first bailout - worth 8bn euros (£6.8bn; $11bn) - to avoid running 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.