The Greek parliament has passed a bill which will see 15,000 state employees lose their jobs by the end of next year.
The bill passed by 168 votes to 123, and had the support of the three parties making up the ruling coalition.
It is part of continuing moves by the centre-right government to cut costs and ensure more bailout money from international creditors.
But it was vociferously opposed by protesters outside parliament.
The new law will overturn what had been a constitutional guarantee for civil servants of a job for life, says the BBC's Mark Lowen in Athens.
The sector has been seen as notoriously bloated since it expanded in the 1970s and 1980s as successive administrations employed their own people, our correspondent adds.
Some 2,000 civil servants will lose their jobs by the end of June, another 2,000 by the end of the year, and a further 11,000 by the end of 2014.
State workers who have broken rules will be targeted for dismissal, but many are expected to be replaced by younger employees in key sectors such as health.
So the law will not slim down the public sector, our correspondent says. That would be achieved by a parallel plan that would see 150,000 state jobs go by the end of 2015, by replacing only some of those who retire.
'Destroying welfare state'
The law is a condition for Greece to receive its next tranche of loans worth 8.8bn euros (£7.4bn; $11.4bn).
Eurozone officials will now meet on Monday to approve the overdue release of 2.8bn euros, said Finance Minister Yannis Stournaras, according to Reuters news agency.
The remaining 6bn euros will be paid on 13 May, he added.
As MPs debated the measures inside parliament, several hundred demonstrators outside took part in a protest called by Adedy, the civil service trade confederation, and the private sector GSEE union.
They were demonstrating against what the unions called "those politicians who are dismantling the public service and destroying the welfare state".
Critics say the law, which is part of a larger package of measures, will only add to Greece's record unemployment rate of 27%.
They say many of those who will lose their jobs are older workers already struggling to support their families and make ends meet.
But others say the measures are overdue.
The conservative coalition, led by Prime Minister Antonis Samaras, has 167 seats in the 300-seat parliament so the measure was always expected to pass.
However, there are reports of divisions within his government on some issues and there is speculation he could reshuffle his ministerial team soon.
Eurozone finance ministers are expected to decide on the next instalment of aid for debt-ridden Greece at a meeting on 16 May.
Since 2010, the European Union and the IMF have promised more than 200bn euros in lending for Greece, the first country to be hit by the eurozone crisis.
The government has imposed tough austerity measures in return for aid, including cuts in pay and pensions leading to numerous general strikes.