EU finance ministers will discuss the Greek crisis later this morning

Greece last night humiliatingly became the first Western democracy to fail to pay its debts to the International Monetary Fund.

On a day of frantic negotiations, Alexis Tsipras, the Greek prime minister, tabled a dramatic request for £21billion to keep his country afloat for the next two years.

But the prospect of such a deal evaporated when Angela Merkel made clear time had run out. The German chancellor’s tough stance meant Greece did not have the cash to repay money lent by the IMF. It had been due to make a £1.1billion payment by 11pm last night.

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Thousands of Greeks took to the streets last night in protest over the financial meltdown facing their country

Riot police were put on standby outside Greek banks as customers tried to withdraw their funds

The Greek government could collapse on Sunday depending on the result of a crucial EU referendum

Greek PM Alexis Tsipras said he will call an election if the Greek people accept the IMF bailout deal

The IMF stopped short of declaring Greece in default, which would have effectively put the country into bankruptcy. Instead it said its executive board would consider a request from Athens for an extension to its loan.

But the existing Greek bailout schemes are now dead, putting the country on course to default on its towering debts – and possibly sending it crashing out of the euro and back to the drachma.

Eurozone ministers will hold further talks today in a bid to find a solution. If that initiative fails, all eyes will turn to Sunday’s referendum on whether to accept the final deal offered by Greece’s creditors.

European Commission chief Jean-Claude Juncker warned Greece will ‘commit suicide’ if it votes No on Sunday. Mr Juncker last night cautioned: ‘Important events for which we are not prepared are taking place in Athens.’

GREEK DEBT PAYMENTS DUE BEFORE THE END OF 2015 DATE DUE AMOUNT IN € MILLIONS Jun 30 € 1,544 Jul 10 € 2,000 Jul 13 € 452 Jul 17 € 1,000 Jul 20 € 2,096 Jul 20 € 1,361 Jul 20 € 25 Aug 07 € 1,000 Aug 20 € 3,020 Aug 20 € 168 Sep 04 € 301 Sep 04 € 1,400 Sep 14 € 339 Sep 16 € 565 Sep 21 € 339 Oct 09 € 1,400 Oct 13 € 452 Dec 07 € 301 Dec 16 € 565 Dec 21 € 339 TOTAL DUE € 18,667

Thousands of anti-austerity protesters staged a protest in Athens on Monday night calling for a No vote. But with the result on a knife-edge, Yes campaigners held a massive counter-demonstration last night.

Mr Tsipras warned yesterday that he could quit and force fresh elections if Greece votes to accept the austerity terms demanded by the EU and IMF. This would make it almost impossible to cut a quick deal, sparking further instability.

However Spanish prime minister Mariano Rajoy, who is under mounting pressure from anti-austerity forces at home, said he hoped that the Greeks would vote Yes – and force Mr Tsipras from office.

He added: ‘If the referendum takes place and if Tsipras loses the referendum, this would be a good thing for Greece because the Greeks will have voted Yes, that they want to stay in the euro, and we could negotiate with another government.’ Yesterday Barack Obama said the Greek crisis could have a ‘significant effect’ on Europe’s economy.

And Italian prime minister Matteo Renzi warned against turning the referendum into a personality contest between Mr Tsipras and Mr Juncker or Mrs Merkel.

‘This is not a referendum on European leaders. This is a vote – euro or drachma,’ he said, adding: ‘The Greeks do not have to say whether they love their prime minister or the head of the European Commission more. What they have to say is whether they want to stay in the single currency.’

But Scotland’s First Minister Nicola Sturgeon claimed the dire warnings being issued by leaders could backfire, saying: ‘Threats won’t help.’

Any new deal will have to be agreed by both the IMF and the parliaments of all 19 eurozone countries, some of which have lost patience with Greece.

The European Central Bank will also now come under pressure to pull the plug on Greece’s banks, which have been on life support for years. Experts believe they could collapse within 48 hours without help, forcing the Greek government to nationalise them and revert to the drachma.

Greek deputy prime minister Yannis Dragasakis hinted last night the referendum might be called off. He told state TV the government had decided to hold the ballot but ‘can make a decision on something else.’

No vote: Graffiti sprawled on a street in Athens ahead of a crunch referendum across Greece on Sunday

Protest: A rally held on the street of Athens for the 'Yes' vote, ahead of Sunday's referendum. Greece has asked for a two-year rescue deal just hours before it was due to default on a loan repayment of 1.6billion euros

On your bike: German Chancellor Angela Merkel has ruled out further negotiations with Greece before Sunday

Greece's membership to the EU is 'non-negotiable', finance minister Mr Varoufakis is reported to have said

Need for speed: Finance Minister Yanis Varoufakis, pictured on his motorcycle leaving his office in Athens this afternoon, previously threatened legal action to stop the country being forced out of the eurozone

Greek bank account holders can only withdraw a maximum of €60 a day while the crisis continues

The political row has caused ruptions across Greece and protesters took part in a demonstration in front of the Greek parliament in Athens yesterday

The minister was surrounded by reporters and photographers as he left the office moments after Greece announced they had requested a rescue deal

Earlier today Varoufakis gave an emphatic 'no' to questions over whether the country would pay its debt

The country's admittance that it would default on its debt led to thousands of desperate Greek nationals trying to withdraw their savings as banks limited withdrawals to 60 euros (£42) per day

People read newspapers in central Athens this morning ahead of what they thought would be Greece's near-inevitable default

The clash between Greece and the creditor powers had become deeply personal. 'Goodwill has evaporated,' said Jean-Claude Juncker, the European Commission's president

A man reads newspaper headlines in central Athens today. Last night the head of the EC made a last-minute offer to try to persuade Greek Prime Minister Alexis Tsipras to accept a bailout deal he has rejected

A man employed at a meat market reads a newspaper in central Athens earlier this morning

Greece has threatened legal action to stop it being forced to leave the eurozone. 'The Greek government will make use of all our legal rights,' Greek Finance Minister Yanis Varoufakis was quoted as saying

No country has ever withdrawn from the common currency, but the prospect of Greece crashing out of the euro has grown after its long-running debt crisis took a dramatic turn over the weekend

The Greek government imposed capital controls and ordered banks and the stock exchange to close for a week, with long queues forming at the ATMs in the country