Greek Prime Minister George Papandreou has declared that Greece's membership in the euro zone is not in question in spite of confusion over his political plans.

Papandreou, who threw world media and global leaders meeting at the G-20 summit in Cannes in confusion Thursday, had been widely expected to resign after earlier the same day some of his Cabinet ministers turned against his initiative for holding a referendum on Greece's second bailout package.

Instead, after meetings with his own party PASOK and his Greek Parliament members, he has shifted in the direction of being willing to form a coalition government with the rightist opposition New Democracy party.

Papandreou has stated that that elections at this moment would entail a big risk of bankruptcy for Greece, global media report.

The Greek prime minister said he had scrapped the idea for the much controversial after the opposition would not back it.

The leader made the comments in an emergency cabinet meeting earlier. A statement from Mr Papandreou's office said he was prepared to drop plans for the referendum.

"The referendum was never an end in itself," Papandreou told the cabinet. "We had a dilemma - either true assent or a referendum. I said yesterday, if the assent were there, we would not need a referendum."

"I will talk to (opposition leader Antonis) Samaras so that we examine the next steps on the basis of a wider consensus," the leader added.

"We must hail the fact that (opposition party) New Democracy will vote for the loan deal," Mr Papandreou said during the meeting. He also said immediate elections would risk a default - essentially rejecting demands by New Democracy leader Antonis Samaras, who wants a transitional government and snap elections.

Subsequently, Papandreou bowed to cabinet rebels and agreed to make way for a negotiated coalition government with the conservative opposition if his Socialists back him in a confidence vote on Friday, government sources said, while the conservative opposition leader called for snap election within six weeks.

European leaders, who agreed the terms of the bailout last week, are deeply opposed to the idea of a referendum in Greece, the BBC reminds. The deal would give the heavily indebted Greek government EUR 130 B and a 50% writeoff of its debts, in return for deeply unpopular austerity measures.

A spokesman for the Greek Prime Minister announced that George Papandreou is "ready to discuss" opportunities for the forming of a caretaker government.

Greek media reported Thursday afternoon that Papandreou has no intention of resigning as Prime Minister of Greece but is ready to reach out to the opposition for the forming of a temporary coalition government.

"We welcome New Democracy's decision to support the 26 October (EU bailout) deal," government spokesman Ilias Mossialos told reporters, adding, "As far as the other proposals are concerned, we are ready to seriously discuss them, in the interest of country."

Greek Prime Minister George Papandreou is refusing to offer his resignation, despite the political and market turmoil of recent days, a source close to the prime minister‘s office told DPA.

Papandreou intended to make his scheduled speech on a vote of confidence in his government that has been set down for late 04 November or early 05 November in the Greek parliament, the source said. The prime minister's support within his own Socialist party has been eroding by the hour. It remains unclear whether he will seek to form a transitional government of technocrats.

Earlier Thursday afternoon conflicting reports emerged in the local and global media as to whether Papandreou was about to resign any minute because of a conflict inside his government on whether Greece should hold a referendum on its second international bailout package and on staying in the euro zone.

Papandreou has been expected to offer a coalition government, led by former Greek central banker and former vice president of the European Central Bank, Lucas Papademos, who enjoys the support and respect of a number of political parties.

The Greek government is on the brink of collapse after several ministers were adamant they would not support Papandreou's plan for a referendum on the EU bailout, which was set to give the heavily indebted Greek government EUR 130 B and a 50% write-off of its debts, in return for deeply unpopular austerity measures.

Top opposition leader Antonis Samaras, who heads the center-right New Democracy party called for a caretaker government and snap elections. He insists that the bailout, which was finalized on October 27, is to be passed by the current Parliament.

Papandreou had called a vote of confidence for Friday. His PASOK party has a slim majority with 152 out of 300 seats.

Amidst staggering disappointment from political parties, New Democracy is backed by 22% of the voters while PASOK is down to 14%.

Meanwhile, the G20 are holding an emergency in Cannes to discuss the Eurozone debt crisis.

Papandreou told reporters in Cannes his referendum would in effect be a vote on whether Greece should remain in the Eurozone.

But the European Commission counters that if Greece is to leave the European single currency, it would have to leave the European Union as well.

Earlier, the chairman of the group of Eurozone countries, Luxembourg's Jean-Claude Juncker, said plans were in place for a Greek exit from the Eurozone.

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