However, doubts remain about the deal's effectiveness and the fate of the euro.
Skeptical observers warned Greece's woes were far from over, the European currency far from secure amid signs of a brewing quarrel involving the EU and ratings agencies after Fitch declared Greece in "restricted default."
The package lowered the interest rates payable by Greece, Ireland and Portugal -- the three EU nations that have received the bailouts.
Britain, outside the eurozone but increasingly exposed to the crisis, said it would lower the interest the Irish Republic has to pay on a $5.3 billion loan from last year.
German Chancellor Angela Merkel said it was her country's "historical duty to support the euro" but critics said the German leader faced mounting domestic political challenges with elections due in the country.
"The euro is good for us, the euro is part of Germany's economic success and a Europe without the euro is unthinkable," Merkel said.
BBC commentator Stephanie Flanders said, "It remains an open question whether countries -- Germany especially -- will one day get to a point where they cannot credibly do what it takes to save the euro."
Upbeat EU Commission President Jose Manuel Barroso said in a CNN interview the deal gave the EU "a new arsenal of weapons" to deal with future crisis, including any that might hit secondary markets.
"I think the decisions taken now are extremely important because they are of systemic nature. Not only there was -- the question of addressing the sustainability of the big net, lowering the interest rate, extending the maturities," Barroso said.
"This will be also applicable to other two countries, Ireland and Portugal, but there are new instruments that allow us to intervene, for instance, in the secondary markets and with a precautionary nature. So, this is in fact a new arsenal of weapons in a systemic plan for our battle that we did not have before," he added.
The Telegraph said there could be trouble ahead in Italian and Spanish bond markets.
The rescue plan aims to roll over Greece's maturing bonds, allowing the country to default temporarily on its debt but EU insists that won't constitute a default.
It is also designed as a comprehensive package aiming to resolve not only Greece's debt crisis but to prevent contagion reaching other European economies, shoring up the euro in the process.
The deal gives additional powers to the European Financial Stability Facility to buy up bonds and to make credit available to countries such as Spain and Italy that aren't at immediate risk of insolvency.
The Institute of International Finance -- a global trade body representing big banks and other major lenders -- said the debt restructuring would target participation by 90 percent of Greece's private sector lenders.
French President Nicolas Sarkozy said private lenders would contribute a total of $194 billion of financing to Greece that could generate about $72 billion of debt relief to Greece.
Fitch ratings agency said the agreement was a positive step but it would have no choice but to declare a default.
"An exchange that offers new securities with terms that are worse than the original contractual terms of the existing debt and where the sovereign is subject to financial distress, constitutes a default event under Fitch's (ratings criteria)," the firm said in a statement.
Other ratings agencies earlier threatened to declare a default in the event of a debt restructuring.
Sarkozy said: "If the rating agencies are using the word you just used (default), it is not part of my vocabulary. Greece will pay its debt."
Barroso reiterated plans to rein in the power of the ratings agencies and said further proposals could be forthcoming in the autumn.
"This package establishes some useful principles including cheaper loans from the (European Financial Stability Facility) and the idea that debt restructuring will happen only in insolvent countries like Greece, not illiquid governments like Italy's," Jacob Funk Kirkegaard of the Peterson Institute of International Economics in Washington told the Financial Times. "But by and of itself, it is not going to put Greece on a sustainable path."
The Financial Times said the EFSF, created last year to preserve European financial stability by providing financial assistance to eurozone countries in economic difficulty, might see its role expanding and be called upon to extend credit lines and help with bank recapitalization.
The deal followed a 6-hour meeting in Berlin Thursday among German Chancellor Angela Merkel, French President Nicolas Sarkozy and European Central Bank President Jean-Claude Trichet.
The last-minute agreement followed a telephone dispute between Merkel and Sarkozy Tuesday.
Merkel spoke later Tuesday with U.S. President Barack Obama by phone, agreeing that "dealing effectively with this crisis is important for sustaining the economic recovery in Europe as well as the global economy," a White House statement said.
The Brussels summit is the 10th time in 18 months European leaders have come together to save the euro and Greece from collapse.
Greece received a $158 billion bailout in May 2010 after its debt soared to more than $485 billion, topping 160 percent of its gross domestic product. Economists say it needs a similar-size second bailout to stay afloat until 2014.
The sovereign debt crisis threatened to spread further when Cyprus warned it would have to take drastic action to avoid a financial rescue of its own after a deadly July 11 naval base explosion destroyed the Mediterranean island country's main power station, causing blackouts during a heat wave and widespread disruption in the economy.
The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.
2014: NFL Cheerleaders [PHOTOS]