Former Greek finance minister Yanis Varoufakis says he does not believe in the country's latest bailout plan and his government should "hand over the keys".

Mr Varoufakis's comments came after the ruling Syriza party had to rely on opposition MPs to pass a second batch of reforms to unlock a new bailout deal worth $126 billion.

MPs in the left-leaning party rebelled against the laws that upped Greece's taxes on public transport and processed foods, and changed pensions and labour rules.

Speaking to Lateline, Mr Varoufakis said it was a "comedy of errors" in Europe and "we seem to be doing the wrong thing consistently".

"It's my considered opinion that the responsible thing to do for our party will be to hand over the keys of government to those who believe in this program, in this fiscal consolidation reform program and the new loan, because we [Syriza] don't believe in it and we should not be trying to implement a program whose logic we contest," he said.

The former University of Sydney lecturer said the reason he resigned as finance minister was because he disagreed with the path prime minister Alexis Tsipras and the government was taking.

He said he voted no in last week's bailout vote but changed his position for the second vote on reforms.

"I am absolutely on the side of Alexis Tsipras. I'm a team player, but I will not succumb to the blackmailing of the eurozone which is forcing a government that is already heavily indebted into more debt without having any plan on how to render that debt sustainable and the Greek economy sustainable," he said.

Mr Varoufakis said European governments and the International Monetary Fund were imposing a set of targets on Greece which were impossible to reach.

"You have to have more and more cutbacks, more and more austerity. That depletes the national income from which the new debts and the old debts have to be repaid," he said.

"That gives rise to more austerity and further shrinkage of national income, a further collapse in the tax take which then requires even more loans.

"It's extending and pretending. It's what bad bankers do when they want to avoid the truth that the bad debts that they are holding will simply never be repaid."

But he said he was not proposing a write-off and instead had hoped for a swap of debts.

"To render our debt repayment schedule doable, manageable and to combine that with a reduction in the degree of austerity which is accompanying this program," he said.

Mr Varoufakis said a Greek exit from the eurozone would be catastrophic.

"Let me put it in a graphic way. The path that you follow to enter the monetary union, once you enter it, disappears, disintegrates," he said.

"It's like a bridge that you cross and once you've crossed it, it collapses.

"So reversing your path, getting out of that monetary union, however ill-designed it might've been, is not a good idea."