Greece's Prime Minister George Papandreou ruled out bankruptcy for his debt-choked country and said it was time for Europe to wake up and take brave decisions, according to a newspaper interview to be published on Sunday.

Ahead of a summit of euro zone leaders on July 21 to discuss a second bailout for Greece, Papandreou said his government had taken the necessary decisions, however difficult they were, to deal with the crisis, and it was Europe's turn to do the same.

We managed not to let Greece go bankrupt, and neither will it go bankrupt, Papandreou was quoted as saying by Greek newspaper Kathimerini, referring to whether credit rating agencies could find Greek debt to be in selective default.

For a year and a half now, I've been continuously reiterating to our partners that we must collectively take brave decisions, not just for the future of Greece but of Europe as a whole. It is time for Europe to wake up, he added.

With sovereign debt jitters having reached Italy, the euro zone's third-largest economy, Europe's leaders are struggling to agree on how to provide new aid for Greece to prevent contagion from spreading further in financial markets.

Papandreou said that several of the options that he had suggested and were rejected a year and a half ago, such as buying back debt, issuing common euro zone bonds and keeping credit rating agencies in check, were now on Europe's negotiating table.

In an ultraconservative Europe, I would even say phobic, the truth is it took time for these thoughts to mature with our partners and for them to be convinced that these proposals are not an alibi in order to avoid our own responsibilities, Papandreou said in the interview.

Greece's total outstanding debt is around 370 billion euros ($523 billion). Most economists regard the debt burden, at around 160 percent of gross domestic product, to be unsustainable as it stifles growth, with the economy seen contracting by nearly 4 percent this year after a 4.5 percent slump last year.

Now everybody understands that Greece needs to be helped to exit recession as soon as possible. The relevant negotiations are making progress, and I hope they are completed as soon as possible, Papandreou said.

A bond buyback is more likely than the other options that euro zone finance ministers have discussed and would allow Greece to cut its public debt by 20 billion euros if purchases were made at market prices, German magazine der Spiegel said on Saturday.

(Reporting by Greg Roumeliotis, editing by Jane Baird)