Greece's former prime minister George Papandreou told his PASOK socialist party on Wednesday that he will step down as party leader and not seek re-election, a socialist deputy told Reuters.

He told us that he will resign as PASOK leader and that he will not run for prime minister again, said the deputy who attended a party meeting on the leadership succession.

Papandreou, 59, stepped down as prime minister in November last year to make way for a new coalition government that would help Greece resolve its biggest financial crisis in decades.

A bungled attempt to call a referendum on his government's deeply unpopular austerity policies spooked Greece's European partners and precipitated his downfall two years after winning elections.

He said he would probably step down in June, another party deputy told Reuters.

Papandreou inherited Greece's debt crisis and was forced to seek a bailout by its euro zone partners and the International Monetary Fund.

He imposed severe spending cuts that proved deeply unpalatable to his party and slashed welfare programmes and generous benefits for civil servants.

Soft-spoken and genteel, Papandreou struggled to follow the examples set by his elder statesman grandfather and larger-than-life father, who each served multiple terms as prime minister and towered over Greek politics for much of the past century.

He was born in St Paul, Minnesota, and Greeks occasionally mocked his mistakes speaking his country's own language as well as his mild manner and his habit of riding a bicycle, unusual in Greece where politicians usually uphold a more macho image.

(Reporting by Renee Maltezou; Writing by George Georgiopoulos; Editing by Roger Atwood)