Luxembourg Prime Minister Jean-Claude Juncker announced the deal following negotiations that stretched from Monday into early Tuesday. Euro zone finance ministers agreed to rescue Greek from bankruptcy with a second bailout of 130 billion euros ($172 billion), and private holders of Greek debt will accept losses, The New York Times reported.
"We have reached a far-reaching agreement on Greece's new program and private-sector involvement," Juncker announced.
The meeting of European finance ministers was held against a backdrop of mounting opposition in Greece against further austerity measures.
The Greek loan package is needed to avert a government default. Athens must pay off $19.2 billion in maturing bond debt March 20 and cannot come up with the money without foreign help.
Dutch Finance Minister Jan Kees de Jager said he would like to see a "permanent troika presence" -- the European Union, European Central Bank and International Monetary Fund -- to guarantee Greek adherence to any deal.
Negotiations stretched into the late evening as Greece tried to convince lenders to cut bond payouts further and concerns mounted the $172 billion package is more than $7 billion short of what Greece actually needs, the British newspaper The Guardian reported.
In Athens, about 200 high school students demonstrated against austerity measures outside Parliament and blocked roads. Local reports indicated at least one scuffle erupted.
German Finance Minister Wolfgang Schaeuble said Sunday he thinks Athens is "on the right path," pointing to pension cuts the Greek Cabinet approved during the weekend as enough to secure European finance ministers' approval of the loan package.
The ministers began meeting in Brussels at 3:30 p.m., local time (9:30 a.m. EST).
Fillon called Schaeuble's remarks "utterly irresponsible" and Hague said forcing Greece from the eurozone would be a technical nightmare.
Economists and politicians have said a Greek bankruptcy would have disastrous effects, spreading like a contagious disease to Portugal, Italy and possibly other countries.
The bailout would be Greece's second in two years. Eurozone countries and the International Monetary Fund agreed to a first aid package -- a $145 billion loan conditional on Greece executing harsh austerity measures -- in May 2010.
While Schaeuble softened his words, he also told German newspaper Der Tagesspiegel: "You can only help people who want to help themselves. We have been ready for some time to help the Greeks build a more efficient tax administration but the offer has still not been taken up."
Greek Prime Minister Lucas Papademos, who flew to Brussels Sunday, sought Monday to assure skeptics his government would truly deliver on the reforms, The Guardian reported.
He was also to hold talks with private-creditor representatives on a related debt-swap deal to cut $132 billion off Greece's liability, forcing the creditors to take a 70-percent cut in the value of their investments.
The swap, if approved, would begin by March 8 and be completed by March 11, state-run Athens News Agency reported.
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