The Greek prime minister has dramatically scrapped plans for a referendum on the European rescue package amid mounting anger among fellow eurozone leaders.
Sources close to George Papandreou said he would not resign but would bow to opposition to his plans to put the bailout deal to a referendum.
The Greek leader is under intense pressure after fellow cabinet ministers made clear they did not support the referendum plan amid international anger that it would delay the implementation of the rescue package thrashed out last week.
On the eve of today's Group of 20 (G20) summit in Cannes, French president Nicolas Sarkozy and German chancellor Angela Merkel pressed Mr Papandreou for a swift resolution to the uncertainty.
Mr Sarkozy and Mrs Merkel had indicated that the next tranche of emergency loans would be withheld from Athens until after the poll, which was to have been held early next month.
US President Barack Obama insisted today that G20 leaders must use the next two days to flesh out plans to resolve the eurozone debt crisis.
"The most important aspect of our task over the next few days is to resolve the financial crisis here in Europe," he said.
He acknowledged that the European Union had made "some important steps towards a comprehensive solution", but added: "Here at the G20 we are going to have to flesh out more of the details about how the plan will be fully and decisively implemented."
Prime Minister David Cameron said today that Britain was ready to consider boosting its contribution to the International Monetary Fund's lending facilities for countries in financial crisis.
But the Prime Minister insisted, as he arrived for the crunch summit of the G20 leading economies in Cannes, that the UK will not support direct IMF investment in a eurozone bailout fund.
Speaking as he went into the G20 summit, which has been dominated by the Greek debt crisis, Mr Cameron told reporters: "I'm here to safeguard the British economy."
