Prime Minister Alexis Tsipras is battling to win lawmakers' approval for a bailout deal to keep Greece in the euro, while the country's creditors, pressed by the IMF to provide massive debt relief, struggled to agree a financial lifeline.
Greece's deputy finance minister Nadia Valavani submitted her resignation in a letter to the PM just before the crucial vote.
"I'm not going to vote for this amendment and this means I cannot stay in the government," Ms Valavani told reporters.
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Having reluctantly conceded to negotiating a third bailout from international lenders on stringent terms, Tsipras must face down a rebellion in his anti-austerity Syriza party to push sweeping pro-market reforms and spending cuts through parliament.
"It's a difficult deal, a deal for which only time will show if it is economically viable," his finance minister, Euclid Tsakalotos, told lawmakers during a debate on reforms.
Dozens of MPs, including senior Syriza figures and the government's junior coalition partner, may partially or fully reject the bailout, forcing Tsipras to rely on pro-European opposition lawmakers to carry the vote, which is expected after midnight.
A snap election could follow if the prime minister's majority collapses, and in an early sign of trouble in store, the deputy finance minister abruptly submitted her resignation and the energy minister said he would not back the deal.
"The choice between a bailout or catastrophe is a choice made in the face of terror," Panagiotis Lafazanis, who heads the far-left flank of Syriza, told reporters.
Adding to the uncertainty, a confidential study by the International Monetary Fund, seen by Reuters, called for much more debt relief than European countries, particularly Germany, have been prepared to countenance so far.
That may cause a dilemma in Germany, which has poured more money than any other country into rescuing Greece and where, after months of bad-tempered negotiations with Athens, there is increasingly vocal opposition to yet another bailout.
Tsipras has described the deal as a "one-way street" imposed on Greece and the rest of his government shared his scepticism.
"EUROPE'S BANKRUPT CHILD"
Berlin may wince at providing huge debt relief to a country it scarcely trusts to honour its promises, but insists on having the IMF in the negotiations to help keep Greece in line.
The European Commission published its own assessment of Greece's debt burden on Wednesday that also offered the prospect of debt relief.
While ruling out any write-offs, the Commission said debt reprofiling was possible, as long as Greece implemented the reforms it has committed to.
Brussels has also proposed 7 billion euros in bridge financing to keep Greece afloat in July, when it must repay crucial loans to the European Central Bank.
The plan could prove controversial as it would use the European Financial Stability Mechanism (EFSM), an EU-wide fund, roping in countries like Britain who balk at their taxpayers contributing to a rescue.
Washington has stepped up pressure on both sides to secure a deal with NATO member Greece. U.S. Treasury Secretary Jack Lew is making a short-notice trip to Frankfurt, Berlin and Paris this week to press for a quick agreement.
Pointing to Washington's importance in the talks, Deputy Prime Minister Yannis Dragasakis said the deal Tsipras struck with creditors might never have happened without U.S. pressure.
Although the bailout package is much tougher than the Greek people could have imagined when they resoundingly rejected a previous offer from the creditors in a referendum on July 5, most want to keep the euro.
With banks shut and the threat of a calamitous exit from the currency bloc hovering over the country if it cannot conclude a deal, many Greeks see the package as the lesser of two evils.
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"We are Europe's bankrupt child and as a child, Europe has been supporting us for five years and told us what we needed to do to get out of this situation," Yannis Theodosia, a 35-year-old civil engineer.
"We did nothing and now we are paying the consequences." French Finance Minister Michel Sapin on Wednesday played down the significance of the IMF's call for more debt relief, saying that was already France's view.
"The IMF is saying the same thing as we are ... we cannot help Greece if we maintain the same debt reimbursement burden on the Greek economy," he told BFM TV.
As he understood it, Sapin said the IMF was not calling for an outright haircut.
VOTING NO
Tsipras will put the bailout package to parliament while grappling with noisy opposition from within his own ranks. Protests on the streets have so far been relatively muted although civil servants and pharmacists -- who are a target in the reforms package -- hold a strike on Wednesday and protest marches by leftwing anti-bailout groups are also planned.
The latest deal was a major capitulation from Syriza, which stormed to power promising an end to austerity. Other rebels also included the fiery parliamentary speaker and the party's parliamentary spokesman, who both announced they would vote against reforms.
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Such outbursts had one right-wing newspaper crowing over the "civil war" engulfing the party.
Syriza's junior coalition partner said it would vote only for certain clauses in the bill, rejecting those reforms that went beyond a previous vote in parliament that had given Tsipras a mandate to negotiate in Brussels.
In recent weeks, negotiations between Athens and its creditors became increasingly fractious, with each side accusing the other of blackmail.
Greece painted European countries, particularly Germany, as bullies, while the creditors said their trust in the Greek negotiators had all but evaporated.
"We have improved. In the beginning we thought that by sending a minister and a few consultants we were negotiating, that was very insufficient," Deputy Prime Minister Dragasakis said in an interview with Sto Kokkino radio.
"The crisis was ours, the crisis existed before the bailout memorandum, it was a crisis of the Greek capitalist system. The memorandums were the medicine to this crisis that proved to be worse than the illness it was supposed to cure."
(Additional reporting by Georgia Kalovyrna, George Georgiopoulos, Ingrid Melander, Angeliki Koutantou in ATHENS, Alastair Macdonald and Jan Strupczewski in BRUSSELS, Mark John and Yann Le Guernigou in PARIS; writing by Matthias Williams; editing by Philippa Fletcher)
