It especially annoyed Osborne, as the United Kingdom was promised in 2010 that the EFSM would not be used for Eurozone bailouts, leading him to initially say the United Kingdom would not contribute.

A decision to use EFSM must be approved by ministers of the 28 European Union member states, in a qualified majority vote in which the United Kingdom has no veto. “The European Commission has agreed these changes will be legally binding”.

Schelling added he had heard from sources in the European Central Bank that emergency liquidity assistance (ELA) for Greek banks is likely to be extended.

Greece’s Alternate Finance Minister Nadia Valavani has resigned from government in protest over the austerity measures the country is asked to implement in exchange for a bailout. Gross financing needs would rise to above the 15 percent of GDP threshold deemed safe and continue rising in the long term, the updated International Monetary Fund study said.

The proposal, seen by Reuters, says the bridge loan would have a maximum maturity of 3 months and would be repaid to the EFSM from money that Greece is to get from the euro zone bailout fund, the European Stability Mechanism (ESM) on the conclusion of negotiations on the next, 86 billion euro three-year bailout.

“From an economic, financial and social point of view it was an absolute disaster, because we all know in democracies that political success and economic success go hand in hand”.

But while the opposing countries could be outvoted, it would be a politically risky move for the rest of the bloc, especially ahead of the United Kingdom referendum on its European Union membership due to take place before the end of 2017.

The Greek parliament has voted overwhelmingly to pass austerity measures demanded by worldwide creditors, paving the way for a multi-billion pound rescue of the country from financial ruin.

Dutch Prime Minister Mark Rutte’s Liberal Party is reserving judgment on the bailout deal meant to save Greece from bankruptcy and a messy exit from the euro single currency.

Greece doesn’t have the money to make a 4.2 billion-euro ($4.6 billion) payment to make to the European Central Bank on Monday.

“I made clear to my European counterparts that this was an absolute red line for Britain”.

He said the proposal to use the fund, originally made by the European Commission, the EU’s executive arm in Brussels, was “not very constructive”.

After the 19 eurozone leaders reached a tentative deal to keep Greece from financial collapse on Monday, the focus turned to how to get Greece a first, small loan so that it can meet looming debt repayments.

The Prime Minister’s official spokeswoman said: “We have always been clear that British taxpayers’ money is not going to be used to provide financing for a eurozone/Greek deal, and that therefore this is a non-starter”.

In another option that would certainly prove to be controversial, Schaeuble proposed that Greece issue IOU’s to pay pensions and other domestic bills, thereby saving its scarce euros for debt payments.