Greek Finance Minister Evangelos Venizelos has come out against holding a referendum on the euro zone bailout, a ministry source said on Thursday, breaking ranks with his prime minister as the government faces collapse.

A lawmaker of Prime Minister George Papandreou's socialist party PASOK said she would not support the government in a parliamentary vote of confidence on Friday, cutting its majority for the vote to just one. Snap elections would probably follow if Papandreou's majority vanished.

PASOK was in turmoil on Thursday with one senior lawmaker calling for a government of national unity following Papandreou's shock call for the referendum on the 130 billion-euro rescue for Greece, and another saying he should resign.

I don't think the government will last until tonight, said Costas Panagopoulos, Managing Director of pollsters ALCO.

Venizelos, one of the most powerful men in the PASOK government, originally supported Papandreou's plan. His change of mind came after he attended an emergency summit in Cannes on Wednesday when the leaders of France and Germany made clear Greece would have to leave the euro zone if voters rejected the bailout, which demands yet more deep austerity.

The finance ministry source told Reuters on condition of anonymity that Venizelos believed the vote on the bailout, agreed by euro zone leaders only last week, should not be held while immediate funding to keep Greece afloat still had to be secured.


Under these conditions a referendum is exactly what the country does not need. He would not have objections if all our pending issues such as the loan instalment and the completion of the bailout plan had been sorted out, the source told Reuters.

It was a very difficult meeting, the source added, referring to talks with German Chancellor Angela Merkel and French President Nicolas Sarkozy.

Papandreou's bombshell announcement on Monday of the referendum and parliamentary vote of confidence plunged Greece into a political as well as an economic crisis.

Papandreou's once-comfortable majority has dwindled to almost nothing. On Thursday PASOK lawmaker Eva Kaili announced she would stay in the party but refused to support the government in the crucial vote expected late on Friday.

Herewith I inform you that I am not resigning as an elected representative of my fellow citizens and my generation, but in Friday's vote I will not cast a vote of confidence in your government, she said in a letter to the speaker of parliament, a fellow PASOK member.

Kaili published the letter on her Facebook page.

This left Papandreou with the support of just 151 deputies out of 300 for Friday's vote.

PASOK lawmaker Costas Gitonas also said the referendum should not take place. No, by no means, he told Mega TV. It's a madhouse.

(Additional by Reuters Athens bureau; Writing by David Stamp; Editing by Andrew Roche)