Greek MPs have passed controversial austerity laws aimed at paving the way for a European Union-backed bailout, following a late-night sitting in the Athens parliament.

The package, the harshest set of austerity measures ever introduced in the country, includes cuts to pensions and spending, sweeping changes to labour laws, and tax hikes.

The reforms are wildly unpopular among Greeks, who elected prime minister Alex Tsipras on an anti-austerity platform.

Protesters took to the streets of Athens ahead of the vote, with petrol bombs being hurled at police outside parliament.

Despite meeting international creditors' demands by pushing the unpopular measures through, the PM also suffered rebellion within his own party.

Thirty-two government members out of 149 voted against the package, and a further six abstained, meaning Mr Tsipras had to rely on the support of pro-European opposition parties.

A final count showed 229 MPs out of 300 voted in favour of the measures, with 64 voting against and six abstaining.

After the vote, Mr Tsipras said: "People need hope and prospect. [They] need opportunity."

ABC Europe correspondent Mary Gearin said the vote was likely to fuel anger on the streets of Greece.

"There are many people in Greece who feel betrayed by this government," she said.

The majority of Greeks voted against similar austerity terms in the referendum on July 5.

Ruling Syriza party fractured after vote divides members

The parliament was under pressure to pass the reforms after Greece struck an agreement with the eurozone to prevent it crashing out of the euro on Monday.

The vote followed a stormy debate in which dozens of government MPs on the left of the ruling Syriza party rebelled against Mr Tsipras and opposed the package.

Greek finance minister Euclid Tsakalotos said backing the reforms as part of the bailout terms would "burden me my whole life". ( AFP: Aris Messinis )

Before the vote, Mr Tsipras urged parliament to back the bailout saying: "We don't believe in it but we are forced to adopt it."

Former finance minister Yanis Varoufakis, who branded the bailout deal "a new Versailles treaty", voted against the new laws.

Energy minister Panagiotis Lafazanis and deputy labour minister Dimitris Stratoulis also voted against the package.

Amid speculation both ministers could lose their jobs in a reshuffle, possibly as early as Thursday, Mr Lafazanis said he remained loyal to the government but was ready to offer his resignation, joining deputy finance minister Nadia Valavani, who stepped down earlier.

"We support Syriza in government and we support the prime minister. We don't support the bailout," Mr Lafazanis said after the vote.

Fellow government member and speaker of the parliament Zoe Constantopoulou branded the measures "social genocide".

Greece's new finance minister, Euclid Tsakalotos, said during the debate that his decision to back the bailout terms was something that "will burden me my whole life".

"I don't know if we did the right thing. I do know we did something we felt we had no choice over," he said.

Eurozone finance ministers to discuss vote, next steps

The result opens the way for talks on a third bailout to begin with European partners, but leaves the future of the Tsipras government unclear following the split in his party ranks.

With parliamentary approval secured, the way has also been cleared for the release of funding to allow Greek banks to reopen, more than two weeks after capital controls were imposed to prevent them from collapsing.

Eurozone finance ministers were due to hold a conference call to discuss the vote.

With Greece facing an urgent deadline on July 20, when a 3.5 billion euro payment to the European Central Bank is due, EU officials were racing to agree to a bridge financing accord that would enable Athens to avoid defaulting on the loan.

Despite strong objections from Britain and the Czech Republic — EU countries that do not use the euro — a 7 billion euro loan is expected to be extended to Greece from the European Financial Stability Mechanism (EFSM), an EU-wide fund not intended for eurozone funding needs.

Given the hurdles facing the agreement, doubts have surfaced about how long it could hold together, with one senior EU official saying it had a "20, maybe 30 per cent chance of success".