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Greece was in political deadlock Saturday as the main opposition party resisted Prime Minister George Papandreou's efforts to form a unity government he said was vital to keep the country in the eurozone.

Fresh from winning a knife-edge confidence vote in parliament early Saturday, Papandreou said he would start talks "very soon" to form a government to pass a bailout package crucial for keeping the debt-wracked nation afloat.

"The application of this deal is the precondition for us staying in the euro. It's as important as that," Papandreou told a crowd of reporters after talks with Greece's president, Carolos Papoulias, that lasted just over an hour.

But only a few hours later, the leader of the main opposition party poured cold water on the plan, hardening his position that early elections must be held, a proposal Papandreou has dismissed as a "catastrophe."

"We insist on our call for immediate elections," said Antonis Samaras, the head of the conservative New Democracy party, in a highly anticipated television address.

The price of New Democracy's support is Papandreou's resignation and early elections, reiterated Samaras. "No one can offer a blank cheque."

Papoulias said he would hold talks with Samaras on Sunday at 1:00 pm local time (1100 GMT). Under the Greek constitution, the president can summon the political parties for talks if the deadlock continues.

Papandreou has already indicated several times that he would step aside for the good of the country.

In dramatic parliamentary scenes early Saturday, Papandreou pulled off a stunning political coup by winning a confidence vote and hinting that he was not attached to his current job.

Carrying the confidence motion by eight votes in the 300-seat parliament, Papandreou said: "I am not interested in a chair, the last thing I am interested in is whether I am re-elected."

The result had hung in the balance amid great tension as each MP voted in favour or against the motion, with the "yes" and "no" camp neck-and-neck right to the end.

Meanwhile, on the streets, there was a sense of anger and resignation amongst Athenians, who said they were far more concerned about their painful financial plight than their squabbling politicians.

"The people are suffering at the moment and they (politicians) are not budging," said Marianna, a shopkeeper.

"A unity government with whom? With the same people? We will have the same results," she said gloomily.

"Papandreou, Samaras. They are all the same," said Takis Karalambos, as he sipped coffee outside a central covered market in Athens.

A businessman who gave his name as Mosafari, said: "These problems should have been solved 30 years ago."

As the optimism sparked by Papandreou's confidence vote win began to evaporate, the parliamentary head of his socialist Pasok party, Christos Protopapas, warned that Greek politics could remain gridlocked.

"I would like to believe that there is still room for manoeuvre, but the crisis is getting worse," Protopapas told Net public television.

"What the Greeks want -- a team led by a third person, neither Papandreou nor Samaras -- is in the process of being lost. It's dangerous," he said.

And there was no sign of a let-up in the fierce pressure being exerted by Greece's European partners.

German Chancellor Angela Merkel warned in her weekly webcast that Europe would need a decade to clean up its finances and emerge from the current debt crisis.

"Everyone in Europe must make an effort to achieve all that is required," Merkel said.

As the politicians squabbled, Greece is fast running out of cash.

Finance Minister Evangelos Venizelos announced recently that Greece "absolutely needed" by December 15 an eight-billion-euro ($11-billion) slice of aid from a 2010 EU rescue package.

Venizelos told MPs earlier Saturday that Greece needed a representative to attend a meeting of eurozone finance ministers in Brussels on Monday where talks on the next tranche of bailout cash would take place.

A cabinet meeting would take place on Sunday to discuss the crunch Brussels talks, Papandreou's office said.

Meanwhile, the media also reflected the danger Greece is in, caught in the eye of the eurozone debt crisis. "Playing politics with fire," the Kathimerini daily wrote on its front page.

The deadlock capped a tumultuous week for Greece that began with Papandreou's disastrous call for a referendum on the 100-billion-euro ($138-billion) EU bailout package that sparked revolt in his own party and roiled markets.

Analysts have warned that renewed political uncertainty could halt the disbursement of a fresh eight-billion-euro loan package that Greece needs to pay the bills.

Following some rigorous discussions with the German and French leaders Papandreou swiftly scrapped the referendum idea before the confidence vote.

Venizelos, tipped in the media to become interim prime minister, said that elections could be held once negotiations on the EU bailout package are complete.

He said the new government would be in power "until the end of February" when details on the plan are expected to be completed "so they can be submitted to the electoral inspection of the Greek people."

AFP