Euro zone finance ministers are likely to agree on Monday on a mechanism for aiding Greece financially, if it is required, but will leave out any sums until Athens asks for them, an EU source said on Saturday.

Policymakers have been debating possible financial support for the heavily-indebted European Union member state for more than a month, but have provided only words of support. Germany, key to any deal, has resisted appeals to promise aid.

British newspaper The Guardian on Saturday quoted sources as saying Monday's meeting of the currency zone's 16 finance ministers would agree to make aid of up to 25 billion euros available.

But a senior EU source with knowledge of preparations for Monday's meeting told Reuters no numbers were likely at this stage.

I think we should be able to agree on principles of a euro area facility for coordinated assistance. The European Commission and the Eurogroup task force would have the mandate to finalize the work, the source said.

It would be the principles and parameters of a facility or mechanism, which then could be activated if needed and requested.

He said no figure had been agreed.

You would have a framework mechanism and you would have blank spaces for the numbers because there has been no request (from Greece) yet, the source said.

Greece has announced steps to reduce its budget deficit this year to 8.7 percent of GDP from 12.7 percent in 2009, triggering street protests and strikes but also reducing market concern over whether the country would be able to service its debt.

That helped Athens sell its bonds with ease on debt markets earlier this month, but policymakers are still searching for ways of making its cost of borrowing -- still far above that of other Europeans -- more sustainable.

They are also concerned that the problems in Greece could undermine confidence in the euro and spread to other heavily indebted eurozone countries such as Portugal or Spain.

CUTBACKS

The EU source said that among the instruments considered to help Greece were both bilateral loans and loan guarantees.

The preparations have been done under the Eurogroup by member states and the Commission. The Commission has done much of the technical work, the source said.

The aim of the exercise so far has been to do the technical preparations, so that the political decision could be possible on Monday. Germany holds the key at the moment.

Polls show that public opinion in Europe's biggest economy Germany is strongly opposed to bailing out Greece, which has for years provided unreliable statistics about the true size of its deficit and debt, breaking EU budget rules.

In a move that is likely to alleviate German concerns about spending money on Greece, the Commission has said it would soon make a proposal for stronger economic cooperation between euro zone countries and tighter surveillance of their performance.

French Economy Minister Christine Lagarde told the Wall Street Journal she believed Greece's austerity moves were behind the improvement in its situation on markets and negated the need for a bailout.

There is no such thing as a bailout plan which would have been approved, agreed or otherwise, because there is no need for such a thing, she said.

But she added that technical experts at the EU have been working on a contingency plan, so that if the need arose all we would have to do is press the button.

The Guardian quoted a senior official at the European, the EU executive, official as saying the euro zone members had agreed on coordinated bilateral contributions in the form of loans or loan guarantees if Athens was unable to refinance its debts and called on the EU for help.

The agreement has been tailored to avoid breaking the rules governing the operation of the euro currency which bar a bailout for a country on the brink of bankruptcy, and to avoid a challenge by Germany's supreme court, the official said.

A German ministry spokesman said he could not believe the newspaper's report on the bailout plan was correct.

We are not aware that this is being planned, he said, adding that Greece had not requested any aid. Greece is implementing its (savings) program and we expect that it will manage it alone.

(Additional reporting by Tim Pearce in London, Pete Harrison in Brussels and Volker Warkentin in Berlin, Writing by Sarah Marsh and Jan Strupczewski; Editing by Patrick Graham)

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