Eurozone countries and the International Monetary Fund (IMF) have struck a deal to give Cyprus a bailout worth €10 billion (£8.66 billion), Reuters reported, citing a senior eurozone official.
Following 10 hours of discussions through the night, eurozone finance ministers and IMF chief Christine Lagarde agreed to the smaller-than-expected package, the report stated.
The bailout is needed to recapitalise Cyprus' banks, which were hit hard by a sovereign debt restructuring in Greece last year.
Under the emergency lending programme, Cyprus agreed to increase its nominal corporate tax rate by 2.5 percentage points to 12.5 percent, the senior source involved in the negotiations told the news agency.
The deal would make Cyprus the fifth country to ask for a bailout from the international lenders, following Greece, Ireland, Portugal and Spain.
Cyprus' rescue deal has sent shivers through southern Europe after a key eurozone figure said it would be a model for future bailouts.
The future is uncertain for the people who must live with the consequences of Cyprus' "painful" bailout deal.
The Dutch Finance Minister has said the bank levy 'bail-in' on large depositors "pushes back the risks" from the rest of the eurozone.