Europe has agreed a 500bn euro (£433bn) emergency package to stabilise the eurozone and stop the panic from the Greece crisis spreading further.
It is made up of 440bn euro (£381bn) from eurozone members, and a 60bn euro (£52bn) top up of an existing EU budget fund for helping struggling economies.
An additional 250bn euro package has also been offered by the International Monetary Fund.
The monster bail-out came after 11 hours of talks in Brussels aimed at preventing Greece’s financial woes moving to other heavily indebted European countries like Ireland, Spain and Portugal.
The size of the fund “proves that we shall defend the euro whatever it takes,” Olli Rehn, the European Union’s commissioner for economic and monetary affairs, said.
The euro, which last week sank to a 14-month low against the dollar, rose nearly 2% in early trade in Asia.
During the summit in Brussels, attended by Chancellor Alistair Darling, the 16 heads of the single currency countries vowed to take whatever steps were required to protect the stability of the euro area.
They were accused of acting too slowly to sort out Greece’s problems when stock markets around the world plunged last week.
But following on from the riots in Athens, the agreement is likely to deal out more pain. Portugal and Spain agreed to accelerate their deficit reduction plans, increasing the need for major public spending cutbacks.
And anger over the Greek bail-out in Germany has delivered Chancellor Angela Merkel’s coalition a humiliating defeat in a regional election.
Mr Darling insisted that Britain would not play any part in underwriting a fund to help struggling eurozone economies.
And a statement after the talks confirmed that the new fund placed the potential risk squarely with the eurozone.
However, the top-up of the EU budget emergency fund could expose the UK to extra payments if a member state defaulted.
Insiders said the maximum exposure for the UK could be between £8.7bn and £13bn.
Mats Persson, Director of Open Europe, campaigning for radical EU reforms, warned: “While it is in everyone’s interest for Europe’s economy to stabilise, this deal could easily spiral out of control and see UK and European taxpayers becoming exposed to ever growing debt burdens of governments over which they have no democratic control whatsoever.
“This is simply unsustainable – both from a democratic and an economic point of view.
“And what we were told would never happen, has now occurred – British taxpayers have become directly liable for the mess created by the euro-experiment.”
Mr Darling had been in touch during the meeting with Shadow Chancellor George Osborne and his Liberal Democrat counterpart Vince Cable – which is standard protocol while negotiations continue to sort out the problems of a hung Parliament.
