Eurozone finance ministers agreed to extend further bailout loans to Greece as well as debt relief, in what they call a "major breakthrough". After late-night talks in Brussels, the ministers agreed to unlock 10.3 billion euros ($11.5 billion) in new loans, the (BBC) reported.
The move came two days after the Greek parliament approved another round of spending cuts and tax increases demanded by international creditors. The ministers also said debt relief would be eventually offered to Greece.
This had been a key demand from the International Monetary Fund (IMF), which says public debt is unsustainable at current levels of about 180% of Greece's gross domestic product.
The deal was announced after 11 hours of talks between the 19 eurozone ministers - known as the Eurogroup. "We achieved a major breakthrough on Greece which enables us to enter a new phase in the Greek financial assistance programme," Eurogroup President Jeroen Dijsselbloem told reporters early on Wednesday.
The IMF and the Eurogroup have been at odds for months over the issue of reducing Greece's debt.