Greek parliamentarians prepared to give their verdict on Prime Minister George Papandreou on Friday in a confidence vote, with many demanding a national unity government to decide the fate of the nation's European bailout and the global economy.

Analysts declared the outcome too tight to forecast, but had a hunch Papandreou might just survive as would-be rebels in his party said they would back their leader one last time -- if he explicitly promised to make way for a national unity government immediately afterwards.

The prime minister must make his intentions clear tonight. We cannot afford to have chaos and anarchy tomorrow, Sofia Giannaka, a lawmaker in Papandreou's socialist PASOK party, said before the vote expected as late as midnight (2200 GMT).

Giannaka said a unity government was a necessity for the country, which will run out of money in December unless it secures the new financial lifeline. If the prime minister doesn't say this, things could get ugly tonight, she said, shortly before the parliamentary debate got underway.

After heavy pressure from European leaders, the government said it had dropped Papandreou's plan to hold a referendum on the bailout package, which had threatened an immediate crisis in the euro zone and cast doubt on Greece's membership.

But the future of the 130 billion euro deal remained hostage to wrangling among Greek politicians, much to the disgust of voters living through dire economic times which have already triggered violent protests on the streets of Athens.

Papandreou says he announced the referendum on Monday -- sending shockwaves through world markets -- to win political consensus for the deal. His opponents have since said they will back the bailout conditionally but accuse him of clinging to power.

LIVING A PARADOX

We are living a paradox. They want us to show that we trust a government which we know that neither people nor the international community trust, said PASOK lawmaker Odysseas Voudouris outside parliament.

My vote tonight will be a mandate for us to proceed quickly to a unity government with a leader who is commonly accepted, he said.

Opposition politicians want Papandreou's resignation and early elections as a price for their support for the bailout deal -- which aims not only to save Greece from bankruptcy but prevent its problems engulfing bigger euro zone economies.

For euro zone leaders -- and Greece's battle to avoid a debt default -- the worst possible outcome would be a stalemate, prolonging the agony over the bailout deal which euro zone leaders agreed only last week.

Finance Minister Evangelos Venizelos promised to drop the referendum plan in telephone calls to European leaders, his ministry said.

TOO TIGHT TO FORECAST

Analysts suspected Papandreou might scrape through even though 24 hours earlier his socialist government was on the verge of collapse.

This is the first confidence vote in many , years where we cannot tell what will happen in parliament. My feeling is that the prime minister will probably have a positive outcome today, said Costas Panagopoulos, head of Alco pollsters.

PASOK has 152 deputies in the 300-member parliament. One lawmaker said on Thursday she would not back the government in the confidence vote, but on Friday softened her line.

Nevertheless, only two defections would strip the government of its majority and probably trigger an early election.

Electoral mathematics meant little on the streets of Athens, where Greeks are struggling with spending cuts, higher taxes and soaring unemployment.

Papandreou may get the 151 votes he needs tonight. But what does this mean for us? This instability is killing us, said Panayiotis Theofilas, 52, father of two and a shop owner.

Yesterday I spent all day in front of the TV, worrying. I couldn't work. What if they throw us out of the euro? We are finished.

For many Greeks, Papandreou has turned into the villain rather than the tragic hero struggling to overcome economic, political and social problems that have built up over years.

The referendum was the worst idea Papandreou ever had. He turned the whole world upside down and now he wants a vote of confidence? How dare he? We are all very angry with him, said Efi Peroyannaki, a 50-year-old boutique saleswoman.

What happened this week was a disgrace. We looked bad and the Europeans are already sick of paying for us.

CONDITIONAL OFFER

On Thursday New Democracy leader Antonis Samaras dropped his opposition to the bailout, which is being pushed by Papandreou's PASOK party, on condition that a short-lived coalition government is formed to take the country to polls.

That means the two main forces in Greek politics now back the deal, despite the new wave of austerity it demands -- on top of cuts which have pushed the economy into recession and brought Greeks on to the streets in sometimes violent protests.

However, in the fractured world of Greek politics this does not ensure the package will win rapid parliamentary approval.

Samaras made Papandreou's stepping down a condition for forming a coalition to pass the bailout quickly through parliament and cancel the referendum. Papandreou told parliament he was not tied to his post.

But people in Athens also had low expectations of the opposition and its ability to work with PASOK. Papandreou looks stupid and Samaras so arrogant. They have nothing in common and they don't agree on anything, said Theofilas.

Through waves of austerity policies demanded by Greece's international lenders, Papandreou has carried the parliamentary group of his PASOK party with him, despite much grumbling within the ranks.

UNFOLDING DRAMA

Greeks gripped by the events gathered around newsstands to catch a glimpse of the headlines on Friday. The financial daily Kerdos captured the mood with its headline: Everything on a knife-edge, while the pro-government daily Tan Nea ran with: A balancing act on the edge of a cliff.

Papandreou has called on his PASOK party to rally behind him in the confidence vote. But his public bravado appeared to mask an acceptance that his term may come to an end soon.

Government sources said Papandreou had struck a deal at a cabinet meeting on Thursday under which he would stand down after he had negotiated a coalition agreement with the conservative opposition -- provided he survives Friday's vote.

Papandreou admitted he had made a mistake in calling on Monday for the referendum on a bailout, the sources said.

(Additional reporting by Reuters Athens bureau; Writing by David Stamp)