The deal agreed in the early hours in Brussels involves up to 130 billion euros ($172 billion) in loans from Athens' euro partners while private creditors will write-down their holdings of Greek government bonds by more than half to slash 107 billion euros from its debt mountain of 350 billion euros.

The head of the Eurogroup of finance ministers, Luxembourg's Jean-Claude Juncker, unveiled the accord before daybreak saying it would "secure Greece's future in the eurozone."

EU economic affairs commissioner Ollie Rehn stressed that Europe's biggest bailout ever would "substantially reduce the debt burden of Greece and will help to reform the economy and administration so as to return to growth and creating jobs."

It was, Rehn said, "an essential step further for Greece."

Greek Prime Minister Lucas Papademos hailed a "historic day" for Athens, saying "we're very happy" to have reached an agreement that avoids a debt default in March.

Papademos, a former European Central Bank vice president named to lead a caretaker Greek government, warned however that a lot of work still lay ahead.

Greek newspapers gave the deal a wary welcome meanwhile, underscoring the austerity to come and lamenting the unprecedented EU fiscal surveillance of the country that the deal involves.

Centre-left dailies Ethnos and Ta Nea respectively spoke of a "heavy price to pay" and "conditional salvation," while financial daily Naftemboriki echoed market doubts about the long-term viability of the country's crushing debt.

"Even if everything works out, the cost to secure the new opportunity afforded to us is a heavy one," Ethnos noted.

Economists that have tracked two years of twists and turns in the Greek drama duly noted the details and said the deal could work, or be undone by potential pitfalls.

Those included crucial parliamentary approval in Finland, Germany and the Netherlands, uncertainty over whether enough Greek bond holders would accept huge losses, Greek elections expected in April and whether the depressed Greek economy will rebound.

"The debt-stricken country needs a plan for growth and this seems to be the biggest challenge at the moment," Gekko Global Markets analyst Anita Paluch said.

Jane Foley at Rabobank forecast that "the country's troubles will continue to play out for years," while Barclays Capital analyst Nick Verdi saw an early risk from the elections even though the main parties have signed off on the reforms required to get the bailout accord.

"Parties further from the center continue to gain popular support and none of those parties has expressed support for the next programme," he noted.

Pointing to historic EU oversight of Greek finances, Ernst & Young senior analyst Marie Diron said: "We may be seeing the blueprint of new relationships between governments in the eurozone, whereby much closer peer scrutiny is enforced to ensure that unsustainable public finances are prevented or at least corrected."

One of the hardest lines was taken by an academic, Michael Ben-Gad who heads the economics department at City University in London.

"My scepticism is long-standing, my argument remains that the Greek state is insolvent, and even after the new agreement that remains the case," he said.

Finally, ING senior economist Carsten Brzeski was upbeat, but not completely convinced.

"It looks like a deal, it walks like a deal, it is almost a deal," he said.

Copyright AFP (Agence France-Presse), 2012