Greek Prime Minister George Papandreou says he plans to form a new government Thursday to help push forward austerity measures tied to an international bailout.
Mr. Papandreou says he will then ask for a vote of confidence in parliament, after coalition talks with the opposition fell apart.
Mr. Papandreou made his announcement on television Wednesday following a day of violent protests against plans for more spending cuts and tax hikes required to secure an international bailout package.
On Thursday, two ruling party lawmakers resigned after criticizing the government’s austerity plans.
Mr. Papandreou is getting support from French President Nicolas Sarkozy, who is rallying European governments to pull together to help Greece deal with its financial crisis.
Mr. Sarkozy said Thursday it is the duty of European Union members to do everything needed to safeguard the stability of the euro.
Mr. Papandreou said a consensus on his economic plans is needed for Greece to get the next vital installment of a $160-billion loan from the EU and International Monetary Fund.
But many in the opposition and some in his own Socialist Party oppose his package of billions of dollars in spending cuts along with higher taxes and selling off many state-owned assets.
Ordinary Greeks are also livid that they are being asked to make more sacrifices.
Wednesday’s protest in Athens’ Syntagma Square turned violent when riot police fired tear gas at thousands of demonstrators who threw stones and fire bombs. At least 40 people were injured. Some protesters tried to form a human chain around parliament to prevent debate on the austerity program. Police set up barricades to allow lawmakers to enter the building. At least 16 people were arrested.
Major labor unions also staged a general strike Wednesday, crippling Greece’s public transit, media and state-run hospitals.