Greece named banker Lucas Papademos as head of a new crisis government on Thursday, ending the country's chaotic search for a leader to save it from default, bankruptcy and expulsion from the euro zone.

A solemn Papademos called on Greeks to unite behind him after months of divisive politicking, as he sets about securing a bailout from the European Union that will impose yet more hardship on a nation already suffering soaring unemployment.

The choices we make will be decisive for the Greek people. The path will not be easy but I am convinced the problems will be resolved faster and at a smaller cost if there is unity, understanding and prudence, Papademos said as he emerged from the coalition talks brokered by President Karolos Papoulias.

In a week when other European leaders started to openly question Athens' membership of the 17-currency bloc, the former European Central Bank vice-president stressed Greece's commitment to the euro.

I am convinced that the country's participation in the euro zone is a guarantee for monetary stability, he said after meeting outgoing Prime Minister George Papandreou and the conservative opposition.

Papademos was left mulling the formation of a coalition government alone in his new prime ministerial office on Thursday night after talks ended with no indication of who the new cabinet would include.

Sources in both parties said Evangelos Venizelos was likely to remain as finance minister when Papoulias swears in the new cabinet, scheduled for 12:00 p.m. (British time) on Friday.

The EU's two top officials -- now facing a similar political crisis in too big to fail Italy -- welcomed news that Papademos had been named prime minister.

We reiterate that our European institutions will continue to do everything within their power to help Greece. But Greece must also do everything within its power to help itself, European Commission President Jose Manuel Barroso and Herman Van Rompuy, European Council President, said in a joint statement.

They said they had told Greece's leaders they needed to send a strong cross-party message, put aside domestic political wrangling and start shrinking the country's huge debt load.

RESPECTED FIGURE

Papademos, a respected figure in European capitals and on financial markets, said the coalition had the specific task of implementing a 130-billion-euro (111 billion pound) bailout deal with the euro zone before calling an early election.

The 64-year-old cuts a grey and uncharismatic figure in the colourful and chaotic world of Greek politics, but Papademos also has a reputation for being calm at a time when the nation is clamouring for stability.

Political leaders had agreed the coalition should govern only until elections pencilled in for February 19, but Papademos signalled he would not necessarily be bound by the date if work remained to be done.

Greeks reacted with exhausted relief that an internationally-recognised technocrat will be in charge after four days of often shambolic negotiations between party leaders on forming the coalition.

After three days of farcical comedy, Greece has today a prime minister who is fully qualified to succeed in the task he has been assigned to, said Costas Panagopoulos, head of pollsters Alco.

The fact that the parties finally managed to cooperate is also very positive. I hope that the big gap between political parties and Greek citizens will now start shrinking.

But analysts abroad were cautious on whether Papademos can impose the tough austerity required by the bailout deal on a Greek people who have already staged a wave of strikes and protests against budget cuts and higher taxes.

As if to prove the point, around 8,000 Communist party supporters marched past parliament on Thursday night, chanting resist and no more austerity.

Jennifer McKeown, senior European economist at Capital Economics in London said it would be extremely difficult to implement austerity measures give strong public opposition.

Some of these measures will be pushed through but in the long run the situation will not improve until Greece leaves the euro zone and devalues its currency.

Analysts also say Papademos, a man with no political experience, may struggle to exert his authority over hardened party figures in his cabinet like Venizelos.

Greeks were just thankful the coalition agreement had been sealed after long-running negotiations during which party leaders struck a deal to install the speaker of parliament as premier, only for it to collapse at the last minute.

It is the only good thing in this case, which has made us all a laughing stock, former Greek President Costis Stefanopoulos told Mega TV shortly before the deal was struck.

DAUNTING PROBLEMS

In a sign of the problems he faces, the statistics service ELSTAT reported unemployment jumped almost 2 points in one month to a record 18.4 percent in August, a time when the rate traditionally falls as tourists flock to Greek beaches.

Papademos said he had set no terms to any political leaders before accepting the job, but government sources said he had driven a hard bargain.

These included a demand that Papandreou's socialist PASOK and the New Democracy party of Antonis Samaras give a written undertaking to support the euro zone bailout package, whose stipulations are likely to be highly unpopular with voters.

EU Economic and Monetary Affairs Commissioner Olli Rehn, exasperated by broken Greek promises, has already insisted the leaders sign up before receiving even an 8 billion euro instalment from Greece's original bailout deal pulled together last year, a fraction of the total it will eventually need.

Unless Greece gets that money, it will default next month when a 2.9 billion euros in debt repayment are due.

Samaras had long argued the spending cuts, tax rises and job losses imposed by the outgoing socialist government under orders from the EU and IMF had deepened Greece's crippling recession, now in its fourth year.

(Additional reporting by Renee Maltezou, Karolina Tagaris and Angeliki Koutantou; Writing by David Stamp and Ben Harding; Editing by Sophie Hares)

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