Euro zone finance ministers have agreed that a Greek request for a bailout extension could now go ahead, subject to approval by member state parliaments.
The European Commission vice president for the euro said on Twitter that the ministers had agreed to the extension via a telephone conference.
Greece's finance minister Yanis Varoufakis said he was pleased with the agreement reached with Eurozone ministers. He said he believes the interest of "the average European above all else" has been served, and that the commitments his country has made are ones his government "wanted to make anyway".
He said: "The weekend will be one of joy and creativity. We are writing our own reforms, with our partners."
IMF Chief Christine Lagarde has welcomed the deal reached between the Greek authorities and the Eurozone finance ministers.
Speaking in Brussels she said the negotiations have been labourious but constructive, and have resulted in a "timeline" for the necessary changes that need to be made. She said the IMF is pleased that work can now begin.
Finance minister Yanis Varoufakis said Greece "combined logic and ideology in the way we negotiated" to reach the bailout deal.
ITV News Economics Editor Richard Edgar reports:
Man of the moment, Greek Finance Minister says "Greece has turned a page"(with a shiny head in foreground) http://t.co/2OV3znqEdh
Tiny room packed with international press. "We combined logic and ideology in the way we negotiated" says Varoufakis http://t.co/zZUGCISyJi
The four month reprieve won by Greece tonight from its Eurogroup paymasters appears to be a heavy defeat for the country, ITV News Europe Editor James Mates has tweeted.
The euro rebounded against the dollar and global equity markets surged to record highs tonight after Greece and euro zone finance ministers reached an agreement to extend a Greek financial rescue package for four months.
Greece and Eurozone finance ministers have reached deal to extend the Greek bailout by four months, euro zone officials said.
"It's done. For four months," one official said
Things are moving quickly at talks between Eurozone ministers in Brussels. In the last hour a European official emerged to say that there is now a text which the Greeks and the rest of the Eurozone ministers are working on - which is a big step, and he said to expect an announcement soon.
What we think is going to happen is that this will buy time for the Greeks, and it will keep the emergency funding flowing, which was due to expire next week. It comes after an afternoon - five hours in fact - of pre-meeting meetings of small groups of ministers assembled here.
As he arrived the German finance minister said that everything that needs to be said has been said - he seemed pretty downbeat.
The Greek finance minister radiated optimism as he has done throughout the pass couple of weeks of negotiations. Right now all members of the Eurozone are still in talks, with Christine Lagarde of the IMF -they have to agree to this text. I asked the Greek finance minister a few minutes ago what this would be and he confirmed it would be a six month extension to the loans. In return the Greeks have agreed to keep the tough economic reforms, and this has left the Germans very satisfied, I understand. This is what they think is necessary to keep Greece on a sustainable economic recovery. One thing is for sure - this isn't the end of it - they have to agree the details in the next weeks and months.
The Greek ambassador in Brussels told ITV News Economics Editor Richard Edgar he expects the loan deal agreed by Eurozone ministers to translate to an extension of six months.
Loan extension would be for six months says Greek ambassador on brussels
The details of the deal are still emerging.