German Finance Minister Wolfgang Schaeuble has said Athens has decided to unilaterally end negotiations.

Schaeuble's comments come shortly after a new emergency session of the Eurogroup kicked off in Brussels.

Mounting tensions have marked the outset of the Eurogroup meeting after Greek PM Alexis Tsipras said Athens will hold a referendum on lenders' latest bailout proposals.

Tsipras announced the move in a late-night televised address after rejecting the terms set by conditions at a Brussels meeting.

"I am very negatively surprised by today’s decision by the Greek government... That is a sad decision for Greece, for it has closed the door on future talks," Eurogroup head and Dutch Finance Minister is quoted by the Guardian as saying.

Greece is now calling on the international lenders from the EU, the European Central Bank and the International Monetary Fund to extend the deadline for payment on a loan installment falling June 30. After that day Greece, which is currently unable to deliver, is facing default unless it accepts the conditions and receives some EUR 15.5 B in return.

In his address Tsipras set July 5 as a likely date for the poll to take place.

But German Chancellor Angela Merkel said on Sunday afternoon waiting any longer was out of the question.

Separately, Defense Minister Panos Kammenos, who heads the junior coalition partner ANEL, reiterated that no referendum will be held if the creditors approve a reform proposal tabled by Athens earlier this week. Lenders already said the measures included were not "substantial" enough.

A vote on the referendum is due in Greece's Parliament at midnight Saturday/Sunday as MPs are waiting for the Eurogroup to end its meeting which was scheduled for 17:00 Brussels time but began three hours earlier.

The referendum proposal and the looming deadline have left Greeks divided, with some queuing in front of ATMs to withdraw money but other appearing calm, world and local media outlets report.