Greek conservatives hope to form a coalition government on Wednesday, June 20, which must persuade mistrustful foreign lenders to allow more leeway in pushing through a deeply unpopular austerity program, Reuters reported.

Exasperated with Greece's repeated failure to honor its promises on budget cuts and reform, euro zone officials have nevertheless begun to accept the program may be impossible to implement without changes, as the country is already off track and its economy is sliding deeper into recession.

One senior euro zone official said trying to enforce the original terms of the 130 billion euro bailout package from the European Union and the International Monetary Fund would mean "signing off on an illusion".

The bailout has split Greek society, and in an election on Sunday the conservative New Democracy party that broadly supports the deal only narrowly beat a radical left-wing bloc that wants to tear it up.

After two days of negotiations, agreement to form a New Democracy-led government backed by the PASOK Socialists and the smaller Democratic Left party appeared to be near.

"A government must be formed as soon as possible," Evangelos Venizelos, head of the PASOK party, said on Tuesday. "As we stand now, it could be formed by midday tomorrow."

The state-run Athens News Agency reported that New Democracy leader Antonis Samaras would meet Venizelos at 0900 GMT on Wednesday and Democratic Left leader Fotis Kouvelis at 1000 GMT.

PASOK is expected to join a coalition, but has previously raised the possibility of a looser alliance such as supporting a minority government.

New Democracy took a 50-seat bonus under Greek electoral law for coming first, and a New Democracy-PASOK alliance would have 162 seats, a majority in the 300-seat parliament. Adding the Democratic Left would give it 179 seats.

Samaras was given a three-day presidential mandate on Monday to form a government. Should his mandate expire, the baton would pass to the party that came second, the SYRIZA party.