The head of the European Commission made a last-minute offer to try to persuade Greek Prime Minister Alexis Tsipras to accept a bailout deal he has rejected before a referendum on Sunday which EU partners say will be a choice of whether to stay in the euro.
There was no official response from the leftwing government, elected in January on a promise to end austerity, but Greek daily Kathimerini reported that Tsipras had told Brussels he was considering the move.
A Greek official told Reuters: "There has been a lot of movement in the last few hours, in the direction of a new proposal."
After months of wrangling and acrimony, the growing possibility that Athens could be forced out of the single currency brought into sharp focus the chaos that could be unleashed in Greece as well as the danger that would arise for the stability of the euro.
"What would happen if Greece came out of the euro? There would be a negative message that euro membership is reversible," said Spanish Prime Minister Mariano Rajoy, who a week ago declared that he did not fear contagion from Greece.
"People may think that if one country can leave the euro, others could do so in the future. I think that is the most serious problem that could arise."
EU and Greek government sources said Jean-Claude Juncker had offered to convene an emergency meeting of euro zone finance ministers on Tuesday to approve an aid payment to prevent Athens defaulting, if Tsipras sent a written acceptance of the terms.
He also dangled the prospect of a negotiation on debt rescheduling later this year if Athens said "yes".
The last-ditch bid from Brussels came as uncertainty built ahead of Sunday's referendum, with a string of European leaders warning that it would effectively be a choice between remaining in the euro or reverting to the drachma.
Opinion polls show Greeks in favour of holding on to the euro but a rally of tens of thousands of anti-austerity protestors in Athens on Monday highlighted the defiance many in Greece feel about being pushed into a corner by the lenders.
Tsipras broke off negotiations with the Commission, the IMF and the European Central Bank and announced early on Saturday a referendum on the bailout terms next Sunday, giving voters just one week to debate the fundamental issues at stake.
Under Juncker's offer, Tsipras would have to send a written acceptance by Tuesday of the terms published by the EU executive on Sunday and agree to campaign in favour of the bailout in the planned July 5 referendum.
European Union leaders hammered home the message that the real choice facing Greeks is whether to stay in the euro zone or return to the drachma, even though the EU has no legal way of forcing a member state to leave the single currency.
French Finance Minister Michel Sapin, who has been most sympathetic to Athens in the negotiations, said in a television interview that negotiations could continue if Greeks voted "Yes" on Sunday, but added: "With a 'no', we go into an unknown territory."
Italian Prime Minister Matteo Renzi warned against turning the referendum into a personality contest between Tsipras and Juncker or German Chancellor Angela Merkel.
"This is not a referendum on European leaders. This is a run-off vote: euro or drachma," Renzi told the Italian business daily Il Sole 24 Ore.
"The Greeks do not have to say whether they love their prime minister or the head of the European Commission more. They have to say whether they want to stay in the single currency."
As the hours ticked by before the bailout officially expires later on Tuesday, Greek officials have said the government will not make a 1.6 billion euro debt repayment to the IMF which also falls due on the same day.
If that does not happen, IMF Managing Director Christine Lagarde will immediately report to the global lender's board at close of business, Washington time, that Greece is "in arrears" – the official euphemism for default.
It will be the first time in the history of the IMF that an advanced economy has defaulted on a loan from the world's financial backstop, putting Athens in the same bracket as Zimbabwe, Sudan and Cuba.
Greece has received nearly 240 billion euros in two EU/IMF bailouts since 2010. Leftist Finance Minister Yanis Varoufakis argues that Athens has had no benefit from the money, which largely went to repay German and French banks which had imprudently lent large sums to successive Greek governments.
The Greek economy has shrunk by more than 25 percent since 2009 and unemployment has soared to over 25 percent, including more than 50 percent of young job seekers.
While the Tsipras government blames German-driven austerity for this economic disaster, EU officials note that other euro zone countries such as Ireland, Portugal and Spain that received bailouts for the state or banks have carried out similar reforms and returned to economic growth, even if unemployment remains high.
Credit ratings agency Standard & Poor's lowered its sovereign rating on Greece to 'CCC minus' from 'CCC' late on Monday, saying the probability of Athens exiting the eurozone was now about 50 percent.
Tsipras put his own position on the line in a television interview on Monday evening, saying he would respect the result of the referendum vote but would not lead a government to administer "austerity in perpetuity".
"If the Greek people want to have a humiliated prime minister, there are a lot of them out there. It won't be me," he said in an interview on Greek state television as one of the biggest rallies seen in Athens in years was taking place.
The show of defiance came at the end of a day that started with stunned Greeks waking up to shuttered banks, long supermarket lines and overwhelming uncertainty over their future in the euro zone.
Juncker's final offer incorporated a proposal from Greece to set value-added tax rates on hotels at 13 percent, rather than the 23 percent in the lenders' original plan. It was not immediately clear whether there would be any additional changes.
If the offer were accepted, the euro zone finance ministers could adopt a statement saying that a 2012 pledge to consider stretching out loan maturities, lowering interest rates and extending an interest payment moratorium on euro zone loans to Greece would be implemented in October.
The offer would be conditional on a letter to Juncker, Eurogroup chairman Jeroen Dijsselbloem, German Chancellor Angela Merkel and French President Francois Hollande arriving in time to arrange an emergency meeting of the Eurogroup on Tuesday.