By Angeliki Koutantou and George Georgiopoulos
ATHENS (Reuters) - Greek Prime Minister Alexis Tsipras appealed to his party's lawmakers on Friday to back a tough reforms package after abruptly offering last-minute concessions to try to save the country from financial meltdown.
After walking into a party meeting to applause, Tsipras rallied his Syriza lawmakers to throw their weight behind the new proposals ahead of a snap vote in parliament on the negotiations, urging them to help keep Greece in the euro.
"We are confronted with crucial decisions," a government official quoted Tspiras telling his Syriza lawmakers.
"We got a mandate to bring a better deal than the ultimatum that the Eurogroup gave us, but certainly not given a mandate to take Greece out of the eurozone, he said. "We are all in this together."
It is unclear whether all the creditors would back the latest reforms package, which was strikingly similar to the terms Greece had rejected in a referendum that Tsipras had called in June.
France, Greece's strongest supporter in the euro zone, rushed to praise the proposals with President Francois Hollande calling them "serious and credible".
The lenders' backing is crucial for euro zone leaders to support the proposals at a summit on Sunday.
European markets rallied on the improved prospects for a last-ditch deal to keep Greece in the currency area, while Italian, Spanish and Portuguese bond yields fell.
Attitudes towards giving Greece more money have hardened, including in Germany, which has contributed more to Greek bailouts than any other country. Some, including a senior member of German Chancellor Angela Merkel's party, greeted the latest reform proposals with scepticism. Latvia's prime minister told German radio he would not accept any proposal that includes a debt writedown.
Finance ministers of the 19-nation euro area will meet on Saturday to decide whether to recommend opening negotiations on a third bailout programme for Athens despite widespread exasperation at the five-year-old Greek debt crisis.
Greece asked for 53.5 billion euros ($59 billion) to help cover its debts until 2018, a review of primary surplus targets in the light of the sharp deterioration of its economy, and a "reprofiling" of the country's long-term debt.
But the plan could cause trouble for Tsipras at home, from hardliners in his own party as well as his junior coalition ally. Any new deal would also have to be endorsed by national parliaments including in Germany.
Tsipras has called a snap vote in parliament asking for its backing to negotiate a list of "prior actions" -- measures his government would take to convince creditors of its intent for an aid deal, and to secure the first disbursement.
"It's a positive step forward - shame it came now and not weeks earlier. This is the same proposal Greece rejected on June 26 and 61 percent of Greeks voted against in the referendum," a euro zone official said.
Asked if there would be a deal, Syriza's parliamentary spokesman Nikos Filis told journalists: "Certainly. Today we are speaking in parliament."
Interior Minister Nikos Voutsis was also upbeat, telling reporters ahead of a Syriza party meeting that he was optimistic that a good deal for Greece could be reached.
"THE RIGHT CHOICE"
The latest offer also included defence spending cuts, a timetable for privatising state assets such as Piraeus port and regional airports, hikes in VAT for hotels and restaurants and slashing a top-up payment for poorer pensioners.
"The 'no' in the referendum appears to be turning into a 'yes' from Tsipras," Commerzbank analyst Markus Koch said.
Greek banks have been closed since June 29, when capital controls were imposed and cash withdrawals rationed after the collapse of previous bailout talks. Greece defaulted on an IMF loan repayment the following day and now faces a critical July 20 bond redemption to the ECB of 3.49 billion euros, which it cannot make without aid.
The country has had two bailouts worth 240 billion euros from the euro zone and the IMF since 2010, but its economy has shrunk by a quarter, unemployment is at more than 25 percent and one in two young people is out of work.
"The prime minister seems to have made the right choice between his party and the interest of Greece," an editorial in the centre-right daily Kathimerini said.
"His decision to accept a tough package of measures will ensure the country stays in the euro. This is not the time for gripes and assessing the damage, what's most important is securing the country's interests and its place in the euro zone."
Germany made a small concession on Thursday by acknowledging that Greece will need some debt restructuring as part of the new programme to make its public finances viable in the medium-term.
"What is most important is that the package of measures will have the parliament's authorisation, not only from the two ruling parties but also the other three pro-European parties of the opposition - New Democracy, Potami and PASOK," the Greek newspaper Ethnos said.
"It is a consensus that has been delayed for five years, costing Greek people a lot. But what really counts is that it came about at last, perhaps at the most appropriate time."
(Reporting by Michele Kambas, George Georgiopoulos, Marius Zaharia, Alastair Macdonald, Angeliki Koutantou, Caroline Copley; Writing by Matthias Williams; Editing by Paul Taylor and Anna Willard)
