The Greek Parliament on Sunday backed plans for a referendum on international creditors' terms for a new bailout, media reported.
The July 5 referendum was called by Prime Minister Alexis Tsipras, who has opposed further budget cuts, on Saturday. He urged voters to deliver a "resounding 'no'" to the package, BBC reported.
The referendum was a result of the creditors offering joint proposals to the Greek side on Thursday, which Greece has rejected and termed it as humiliating.
Eurozone partners have criticised Greece's referendum announcement, and rejected its request to extend the bailout programme beyond a deadline of June 30.
Greece faces default if it fails to pay 1.6 billion euros ($1.7 billion) to the International Monetary Fund (IMF) on June 30.
Tsipras's motion on a referendum won the backing in the 300-member strong parliament, with at least 179 MPs voting "yes".
"Speaking just before the vote, Tsipras described the creditors' proposal as "an insulting ultimatum" and said an emphatic "no" vote on July 5 would strengthen Greece's negotiating position", the media report said.
His government had earlier rejected the creditors' offer of a five-month extension to Greece's bailout programme in exchange for reforms.
On Saturday, eurozone finance ministers rejected the Greek proposal for the bailout extension beyond the proposed deadline.