Greek Prime Minister George Papandreou will hold talks with German Chancellor Angela Merkel later on Tuesday to discuss his country's progress in cutting its budget deficit.

The meeting comes as policymakers decide whether to release the latest tranche of Greek bailout funds.

European leaders are trying to agree a comprehensive package to solve the eurozone debt crisis once and for all.

However, divisions remain between member states on how best to do so.

G20 leaders met over the weekend to discuss the best way forward, but EU officials stressed that no grand plan of action had been agreed.

A number of ideas were reportedly discussed, including a 50% write-down of Greece's government debts.

Other proposals included strengthening big European banks that could be hit by any defaults on national debt obligations, and boosting the size of the eurozone bailout fund.

Berlin shot down moves to boost debt rescue funding, bursting renewed optimism on markets amid global pressure for the euro zone to stave-off recession.

Germany is continental Europe's de facto paymaster, expected to provide the lion's share of any increased loans, but German Chancellor Angela Merkel is facing increasing discontent inside her own party.

Meanwhile US President Barack Obama said the sovereign debt crisis in Europe is "scaring the world" and criticized European leaders for not dealing with the issue as quickly as needed.

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