The dispute between Greece and its creditors has turned more ugly after the European body financing the country’s €86bn (£72bn) bailout programme decided to freeze a deal on short-term debt relief measures.

The prime minister, Alexis Tsipras, was taken by surprise on Wednesday when the European Stability Mechanism announced it would not honour an accord to ease the burden of repayment obligations on Greece’s debt pile. The decision, taken in direct retribution for a series of surprise social welfare measures unveiled by the leader, is likely to put Athens on a war footing with lenders amid mounting signs of the Greek crisis flaring again.

Last week, Tsipras took the unexpected step of declaring a one-off pre-Christmas bonus for an estimated 1.6 million retirees living on €800 or less a month. This week he added that the Aegean islands would be exempt from a sales tax demanded by creditors.

“Following recent proposals by the Greek government to spend additional fiscal resources for pensions and VAT, our governing bodies have put their decisions temporarily on hold,” said a spokesman for the ESM, referring to a deal that would have deferred an interest rate increase on Greece’s debt.

“Institutions are currently assessing the impact of Greek government decisions vis-à-vis the ESM programme commitments and targets. [We] will then analyse the institutions’ assessment and subsequently decide how to proceed.”

The announcement followed a statement by the Euro group of finance ministers, representing members of the single currency, which also suggested that Athens had acted out of line. Earlier on Wednesday Germany – the single biggest contributor to the three bailouts Greece has received since 2010 – said the benefits were incompatible with programme targets.

Everyone has to respect the Greek people, who for the last seven years have made huge sacrifices in the name of Europe Alexis Tsipras

But Tsipras, whose popularity has waned considerably since his leftwing government implemented wage cuts and tax increases it once vowed to overturn, appears in defiant mood. Despite the outcry he has categorically refused to rescind the special pension supplement, saying the €617m required for the bonus will be drawn from the budget surplus his government has managed to achieve.

Visiting the northern city of Thessaloniki on Wednesday, he ratcheted up his anti-austerity rhetoric, announcing that Athens would spend €11.5m next year extending free meals to 30,000 underprivileged schoolchildren.

“This programme has been factored in to the budget of 2017,” he told local mayors, denying the aid would derail the programme of tough fiscal targets Greece has agreed to meet.

“I think everyone has to respect the Greek people, who for the last seven years have made huge sacrifices in the name of Europe. We have carried the weight of the refugee crisis. In the name of Europe we have, in recent years, implemented an extremely hard policy of austerity. There has to be respect from all.”

The prospect of the Greek debt crisis flaring up again came as Athens also sparred with the International Monetary Fund which, with the exception of a third bailout signed last summer, has supported the rescue packages shoring up the Greek economy. On Tuesday Tsipras derided IMF staff as “foolish technocrats” who had repeatedly miscalculated the impact of recessionary policies on the country.

“They can’t even get their numbers right,” he said, after Greek officials reacted furiously to what they described as intense IMF pressure to adopt further austerity once bailout loans end in 2018. “They’ve often admitted that they’ve been wrong, but now they’re telling us again, ‘What’s wrong is right’.”

With tensions escalating – and local media painting relations with creditors in terms of open warfare – any hope of concluding an ongoing review of the latest programme has quickly faded.

Tsipras, who hopes to break the deadlock in talks later this week with his French and German counterparts, has signalled that he will ask the IMF to withdraw from the bailout altogether. Few believe that will assuage creditor sentiment at a time when Athens is perceived to be dragging its feet on reforms.