Greece will receive no more European bailout money until it decides whether it wants to stay in the eurozone, Nicolas Sarkozy and Angela Merkel announced on Wednesday night.

The French president and German chancellor hastily convened a late-night press conference after holding what they called "tough and hard" emergency talks with the Greek prime minister on the margins of the G20 summit in Cannes.

They made clear that saving the euro was ultimately more important to them than rescuing Greece.

European leaders were angered and markets wobbled over George Papandreou's surprise unilateral announcement on Monday that he would hold a referendum on a €130bn (£111.9bn) bailout deal reached with eurozone leaders at a Brussels summit last week.

"Our Greek friends must decide whether they want to continue the journey with us," Sarkozy said. He added that calling a referendum was a legitimate endeavour but it must be done as soon as possible, "we can't stay in a period of prolonged uncertainty".

He said it should take place on 4 or 5 December, as Papandreou had suggested. The French president also insisted that the specific issue put to the Greeks must take the form of a general question on whether it wanted to stay part of the eurozone.

Sarkozy said: "It's clear that question has to be on the European future of Greece: does Greece want to stay in the euro? We hope it does, but it's up to Greek people to pronounce on that."

He said Greece was a "great civilisation, independent, and we trust them to fix the choices of their future, we leave them free in their decision." He said France and Germany wanted to continue to work with the Greeks but he could not accept that the rules set out in Brussels last week were not adhered to.

He said bailout packages had worked in Ireland and Portugal because both the ruling majority party and the opposition agreed to form a political consensus in support of them. He called on Greece to do the same.

Merkel said: "We would rather achieve a stabilisation of the euro with Greece than without Greece, but this goal of stabilising the euro is more important."

She said the sudden Greek announcement of a referendum had changed the "psychological situation" and European leaders now needed to be able to inspire confidence in the single currency.

She said the meeting was conducted "in a spirit of friendship, but also of seriousness."

The European Union and International Monetary Fund said Greece would not receive an urgently needed €8bn aid instalment, due this month, until after the vote because official creditors wanted to be sure Athens would stick to its austerity programme.

After the meeting with Sarkozy and Merkel, Papandreou said he believed that Greeks wanted to remain in the eurozone and a referendum to be held in early December would show that.

He said Greece could live up to the obligations required of it to stay in the single currency, but he needed a wider consensus than he had politically.

"The Greek people want us to remain in the eurozone," he told reporters. "We are part of the eurozone and we are proud to be part of the eurozone.

"Being part of the eurozone means having many rights and also obligations. We can live up to these obligations. I do believe there is a wide consensus among the Greek people and that's why I want the Greek people to speak."