Greek Prime Minister George Papandreou said that he will form a new government on Thursday and seek a vote of confidence in parliament, in a national televised address late Wednesday amidst violence in the capital, Athens, dpa reported.
Papandreou's move was designed to ensure that a wave of new austerity measures or 28 billion euros (41 billion dollars) worth of spending cuts and tax hikes by 2015 are pushed through parliament.
The government's austerity measures are needed to secure continued funding from a 110-billion-euro international bailout package needed to stave off bankruptcy.
Earlier, the prime minister had offered to step down in return for the creation of a unity government with the opposition conservative party - provided that it provide a clear agenda on how to deal with reforms to avoid bankruptcy.
But sources in the conservative opposition party said that the conservatives would only take part in a new unity government if the terms of an international bailout by the European Union and International Monetary Fund (IMF) were renegotiated and Papandreou steps down as prime minister.
"I will continue on the same course. I put forward proposals to the main opposition but the conditions that they gave will hold the country back," the prime minister said in a national televised address.
"Tomorrow I will form a new government and then I will ask for a vote of confidence."
The development came as thousands of Greeks took part in a 24-hour strike over a wave of austerity measures, with clashes between police and protesters outside parliament.