By Malcolm Brabant
BBC News, Athens
The announcement comes a day after a strike by Greek civil servants
This is the most momentous "name day" in the life of Greece's Prime Minister, George Papandreou, and for all the wrong reasons.
Like other Greeks called George, 23 April - Saint George's Day - is more important than their birthdays.
But the prime minister had little cause for celebration as he stood on the waterfront on Kastellorizo, Greece's most distant island, and announced surrender to the forces of international finance.
Until Thursday, his socialist administration was still insisting that it wanted to borrow money from the world's markets to repay Greece's elephantine debt.
But capitulation was inevitable after European statisticians disclosed that Greece's deficit was even worse than first thought.
In addition some banks had been expressing concern that, without the eurozone safety net, Greece might give them what is euphemistically known as a haircut, by either delaying the repayment of debt, or paying less than it owed.
Ruinous interest rates
After Mr Papandreou made the announcement, government sources gave the reasons behind the decision.
The single currency is facing its biggest credibility test since its launch in 1999
One said: "We are asking for the activation of this plan today because we do not want our sacrifices to be in vain - all of our savings to be put towards interest rates. The Greek people deserve a change for their country.
"We are on track with our plan to reduce the deficit by 4% this year and this mechanism will help us achieve our targets.
"With the activation of this mechanism, we will have cast aside all doubts that we will face any difficulties with funding in the foreseeable future.
"We have acted today to bring the calmness necessary - a safe harbour - to lay solid foundations for a new economy, a stronger Greece. There can no longer be any credible talk of default. "
A British banker in Greece told me he thought the rescue package would keep Greece afloat for a year.
But he was doubtful that the European Union would want to keep pouring money into Greece after that.
The great fear of Greeks is that the International Monetary Fund will coerce the government into making even more swingeing cuts than it has dared implement so far.
Kriton Orfanos, a psychologist at a family centre in Athens, estimates that he has lost 10% of his salary and fears that his future pension will be slashed from 1,100 to 650 euros (£953 to £563) a month.
"I have to tell the European people that they have to fight together with us because these [austerity] measures will come to other countries after us, like Italy, Portugal, Spain, even in the UK."