Greece has sealed a deal with the EU and IMF that opens the door to a multi-billion euro financial bailout but will require major sacrifices from the Greek people, Prime Minister George Papandreou said on Sunday.

We have built the support mechanism out of nothing, Papandreou told a televised cabinet meeting. A few days ago we asked for its activation and today we ratify the agreement. It is an unprecedented support package for an unprecedented effort by the Greek people.

Papandreou said that unless Greeks were willing to make major sacrifices the country would go bankrupt. These sacrifices will give us breathing space and the time we need to make great changes, he said.

The deal represents the first rescue of a member of the 16-nation currency bloc by its fellow countries, a step that EU treaties explicitly discourage but which EU policymakers say is necessary to save the euro zone from breaking apart.

A meeting of euro zone finance ministers, scheduled for 1400 GMT in Brussels, is expected to give its go-ahead to the aid, which could reach up to 120 billion euros ($160 billion) over three years and will come in return for tough austerity measures.

Greece and its international backers hope the deal can stem a crisis that has shaken markets worldwide, stoked fears of contagion to other euro zone members such as Portugal and Spain, and exposed deep divisions in the 11-year old currency bloc.

On Saturday, thousands marched in May Day demonstrations in Athens shouting slogans against austerity measures they say will hurt the poor and drag the country further into recession.

No to the IMF's junta!, protesters chanted, referring to the military dictatorship which ruled Greece from 1967 to 1974. Hands off our rights! IMF and EU Commission out!, the protesters shouted as they marched to parliament.

TAKING TO THE STREETS

More than half of Greeks say they will take to the streets if the government agrees to new austerity measures, according to an ALCO poll released on Friday by the newspaper Proto Thema.

All other steps taken so far by Greece and the EU have failed to calm months of market jitters that have pushed the country's borrowing costs to record highs.

Economists say that if euro states fail to engineer a rescue that calms markets, they could end up footing a bill of half a trillion euros ($650 billion) to save several nations.

Both Portugal and Spain saw their debt downgraded by ratings agencies this week and could become targets for the market unless they tackle their deficits swiftly.

(Writing by Noah Barkin; editing by David Stamp)

Portugal International Monetary Fund