The Greek Prime Minister George Papandreou and the opposition leader Antonis Samaras have agreed on a new coalition government in principle.
Who will lead it will be decided on Monday but it will not be Papandreou according to a statement issued following crisis talks on Sunday evening.
Those were prompted by a 24-hour deadline issued by the European Union to Greece to put together a national unity government in order to qualify for the next instalment of a bailout fund.
Papandreou’s position had looked untenable from the moment he said he would call a referendum on that deal.
It was also decided there would not be early elections until the rescue package was in place.
The EU had told Greece it needed to reach a deal by Monday afternoon when the next tranche of aid will be discussed at a meeting of EU finance ministers.
International Monetary Fund chief, Christine Lagarde, also said this weekend political stability was needed in Greece before lenders would provide more loans.
Unless it can secure more funding, the Greek government is set to run out of cash by the middle of December.
Breakthrough in Greek political deadlock