Greece told it must implement reforms

German and French leaders said tonight it was “more essential than ever” for Greece to implement EU reform measures.

In a telephone conference with the Greek prime minister George Papendreou, Chancellor Angela Merkel and President Nicolas Sarkozy said they were "convinced that the future of Greece is in the eurozone".

Greece reform measures would, if implemented, return Greece to "sustainable and balanced growth" and "consolidate eurozone stability".

"The leaders made it clear to the Greek prime minister the importance of the strict and effective implementation" of EU/IMF reform measures in its austerity programme for Greece, according to Dr Merkel's spokesman, Steffen Seibert.

"This is a condition for the pay-out of future trances from the programme," he added. "The Greek prime minister confirmed the absolute determination of his government to take all necessary measures to implement in their entirety all promises given."

Meanwhile, Italy's parliament today approved a much revised €54 billion austerity plan as Rome struggles to stem a debt crisis threatening the entire euro zone.

In a sign that global leaders are losing patience at the response to the debt debacle, US president Barack Obama intervened yesterday to say euro zone leaders must show markets they were taking responsibility for the crisis.

In a move without precedent, US treasury secretary Timothy Geithner will attend a meeting of EU finance ministers in Poland on Friday as they try again to come to grips with the emergency.

High-level sources briefed on Europe's engagement with Greece cite renewed concern that the intensified austerity effort may yet lead to the collapse of Mr Papandreou's government.

Greece's next round of rescue aid hangs in the balance due to a dispute over its failure to achieve the targets set out in the plan.