European Commission to rescue Greece

Amid signs Greece is planning to take its troubles to the International Monetary Fund, Commission president Jos Manuel Barroso proposed a solution to keep the problem within the EU "family".

He said Brussels would be putting forward "an instrument for co-ordinated assistance" to Greece when EU leaders meet for a summit in Brussels next week.

He described the plan as "a system of co-ordinated bilateral loans" to Greece from other single currency member states.

There would be strict conditions – a reference to Greek pledges to meet deadlines for reducing its massive public deficit – and it would be compatible with a "no bail-out clause", agreed when the single currency was first set up.

The move did not imply the "immediate activation" of a new scheme, said Mr Barroso, adding: "Our objective is an instrument designed with the euro area."