GREECE was plunged into further turmoil last night as a third attempt to forge a coalition government collapsed, leaving the country facing the prospect of fresh elections.
The latest talks failed after the left-wing leader who wants to renegotiate the EU bailout refused to join forces with parties that support austerity.
Alexis Tsipras of the Radical Left Coalition (Syriza) said his presence in the proposed coalition was merely being sought by pro-bailout parties as a "left-wing accomplice".
Evangelos Venizelos of the Pasok party said he would return his mandate to form a government to the president today.
A slim chance remains that an emergency 'national-unity' government may be formed if the president can convince the parties to work together.
But given the rancour on display yesterday, a new election next month is a more likely outcome. It is a scenario that would weaken confidence in Greece's ability to meet its debts and stay in the euro.
The Syriza leader has called the conditions of Greece's financial rescue plan "barbaric" and vowed to tear it up.
However, Mr Venizelos accused Mr Tsipras (37), who has taken the political scene by storm, of failing to "face up to his political responsibilities".
Hopes of a breakthrough were raised on Thursday when the Democratic Left party proposed a national-unity government that would seek to extricate Greece from its two loan deals, worth €240bn.
Expectations increased further when Antonis Samaras of New Democracy declared that he could work with Pasok and Democratic Left.
However, those hopes receded when Mr Samaras decided that he would not join a government without Syriza, which polled second place. He said to do so would be to ignore the message of the election.
With opinion polls showing Syriza's popularity jumping to 27.7pc, Mr Tsipras may have preferred to wait for another election next month. Victory would give his party the probable ability to form a coalition with one partner.
Earlier in the day, the outgoing prime minister, Lucas Papademos, told the president, Karolos Papoulias, that there were "issues of economic and foreign policy that require immediate attention".
Greece has already committed to itemising €11.5bn in savings over two years. It also needs to pay back €436m in maturing debt on May 15.
The German finance minister insisted that the single currency would weather the storm if Greece was forced out.
"We want Greece to remain in the eurozone. But it also has to want this and to fulfil its obligations," Wolfgang Schauble said. (© Daily Telegraph, London)