Prime minister warns of “chaos” if $17bn legislation is not approved within the next week.

Greece’s coalition government will delay a vote on major new austerity measures by another week, warning there would be financial chaos if a deal is not reached.

Finance Minister Yannis Stournaras told reporters on Tuesday that the austerity measures, worth 13.5bn euros ($17.4bn), would be submitted to parliament next week, as the three parties in government continue to disagree over new savings demanded by international bailout lenders.

Stournaras denied local media reports that the bill could be broken up to ease objections by a left-wing junior coalition partner. “All of the [draft legislation] will be submitted next week. I think there is no other way to do it,” he said.

Greece’s bailout creditors want the austerity package passed if they are to hand over more loans that Greece needs to avoid bankruptcy.

Antonis Samaras, Greece’s conservative prime minister, is at odds with the Democratic Left party, a coalition partner that is threatening to vote against the new austerity measures unless labour reforms include in them are scrapped.

‘Led into chaos’

Samaras formed a coalition with the traditional rival Socialists and the Democratic Left after general elections in June.

In a statement, the prime minister said he had “exhausted all the available time” to try and reach a consensus.

“The problem is not whether we [introduce] this measure or that measure. On the contrary: It is what we would do if no agreement is reached and the country is led into chaos,” he said.

Unemployment in Greece has topped 25 per cent, with rapidly worsening poverty that has prompted the Democratic Left to harden its position.

“There are certain issues for us that are fundamental, like labour issues,” Theodoros Margaritis, a senior member of the Democratic Left party, told private Skai television.

“The dilemma is with Mr Samaras. Does he want a left-wing party in his government or not? Does he want our consent on certain issues, or does he want to proceed alone? If he wants, he may proceed alone.”

Cracks in Greece’s coalition government are likely to be tested on Wednesday when legislators are set to vote on a privatisation bill. The new law would give the government broader powers to privatise public utilities, but is facing growing dissent from deputies in the Socialist party and Democratic Left.

Also on Wednesday, Stournaras will present the new draft state budget for 2013. The country’s two biggest labour unions have called a central Athens rally in the evening, to protest the new austerity measures.

And Greek journalists’ unions took the unusual step of calling rolling 24-hour strikes from Wednesday. The unions oppose government plans to merge their healthcare funds with the struggling state EOPYY fund, which covers nine in 10 Greeks but has trouble paying its bills to pharmacists and doctors.

On Tuesday, dozens of Greek secret service employees held a rare protest against planned income cuts, inside the public order ministry compound. TV crews were not allowed to record the protest.