Greece will extend its territorial waters from six to 12 nautical miles in response to the current crisis with Turkey over drilling rights in the eastern Mediterranean.
The extension - which is legal - should take place along Greece’s Italy-facing coastline, in the west, hence not directly affecting the territory at the heart of the dispute.
Prime minister Kyriakos Mitsotakis told parliament that Greece was abandoning decades of “passive” foreign policy.
At the same time, Turkish President Erdogan warned Greece on Wednesday not to test his country’s patience or courage.
“Turkey will take what is its right in the Mediterranean, in the Aegean and in the Black Sea,” he said, adding he is "determined to do whatever is necessary in political, economic and military terms.”
His tough words came after a German mediation attempt on Tuesday, with foreign minister Heiko Maas calling for tension de-escalate, and warning Turkey that a "spark could lead to a disaster".
The two NATO allies have come to blows over energy resources in the disputed Mediterranean Sea and are both set to carry out rival navy drills. They have also put their militaries on high alert and have sent warships to shadow each other in a dispute that has drawn in the European Union.
“The current situation in the eastern Mediterranean is ... playing with fire, and any spark -- however small -- could lead to a disaster,” German Foreign Minister Heiko Maas said after meeting with his Greek counterpart Nikos Dendias.
Maas said Germany and the whole of the EU stood by Greece "in firm solidarity".
"What we now need absolutely and immediately are signals of de-escalation and a readiness for dialogue,” he said.
Turkey and Greece announced military exercises on Tuesday in sections of a broad area between Crete and Cyprus.
Why have Turkey and Greece come to blows?
The Turkish government disputes Greece’s claim to exclusive rights in the waters where Turkey's Oruc Reis research vessel is now surveying.
Turkey is also prospecting for hydrocarbons in waters where Cyprus claims exclusive economic rights.
But Greece says the vessel is over its own continental shelf, where it has exclusive rights on potential undersea gas and oil deposits and has sent its own warships to shadow the Turkish flotilla.
What has Athens said?
Dendias accused Turkey of continuing to provoke its neighbour and displaying “neo-Ottoman” ideology on Tuesday.
“As we speak, Turkey continues to act illegally, to escalate, to provoke,” he said.
“Instead of de-escalation, we are witnessing new provocations. We are witnessing the attempt to implement expansionist aims against neighbours and allies.”
What has Ankara said?
After speaking with Maas, Turkey said on Tuesday it was ready for talks with Greece.
"We are in favour of negotiations for fair sharing but nobody should lay down preconditions. This cannot happen with preconditions laid down by Greece," Turkish Foreign Minister Mevlut Cavusoglu said after talks with Maas in Ankara.
But on Monday Turkish President Recep Tayyip Erdogan accused Greece of endangering navigational safety after it announced military and naval exercises near the site where Turkey is drilling.
In a speech Erdogan said Greece is "endangering the coastal and navigational safety of all ships in the region" and warned that its attitude to international law had thrown Greece "into a chaos that it cannot get out of."
Erdogan has vowed he will not abandon the search for energy in the Eastern Mediterranean.
“Turkey will not take the slightest step back concerning the operations of the Orus Reis nor (concerning) our (naval) fleet," he said. "On the contrary, Turkey will act with more determination concerning the protection of its rights, and (of) laws in the region.”
How has Cyprus and the EU reacted?
Cyprus' Defense Ministry said warplanes and navy ships from France, Italy, Greece and Cyprus would be holding air and sea military exercises off the east Mediterranean island nation starting Wednesday.
France and Greece will deploy both aircraft and warships as part of the Aug. 26-28 drills, while Cyprus will activate its air defence system to test its capabilities.
EU foreign ministers are expected to discuss the crisis in the eastern Mediterranean at an informal meeting in Berlin this week.
'Difficult for the EU'
Dr Ilke Toygür is a European affairs analyst at Elcano Royal Institute in Spain and Adjunct Professor of Political Science in Carlos III University of Madrid.
"It is important to underline maritime borders are national competencies, we have Greece and Cyprus totally involved in this and France and Italy also getting involved in the conflict... It is very difficult for the EU as it is a side but also trying to be an intermediary at the same time."