Greece has agreed to give creditors a new list of reforms to get its bailout back on track after Prime Minister Alexis Tsipras held talks with European leaders in Brussels.
European leaders agreed to finish work "as fast as possible" on completing Greece's EU-IMF rescue programme, a statement said, paving the way for crucial funds to help Athens avoid bankruptcy and a catastrophic exit from the euro.
After two months of mounting frustration on both sides since Tsipras was elected with a mandate to end years of austerity imposed by creditors' conditions, the three-hour meeting on the sidelines of an EU summit was requested by Tsipras to break the impasse between the two sides.
The radical left-wing Greek leader sat down for a three-hour meeting with German Chancellor Angela Merkel, French President Francois Hollande and the EU's top officials on the sidelines of a summit in Brussels.
"We have put the process back on track," Tsipras told reporters after the talks.
"It is clear that Greece is not obliged to implement recessionary measures," the 40-year-old Greek premier said, referring to previously agreed reforms.
"Greece will submit its own structural reforms, which it will implement."
The joint statement by the EU institutions made after the meeting confirmed the new method agreed on: "Greek authorities will have the ownership of the reforms and will present a full list of specific reforms in the next days."
While the statement spoke of a "spirit of mutual trust" and Tsipras said he left feeling more optimistic, Merkel stressed no money would be released before Athens implements budget measures and other reforms that it has so far been reluctant to consent to.
"The Greek prime minister declared that he is willing to present such a list and that he will do so quickly," she told a press conference.
Merkel, who as leader of Europe's biggest economy has led efforts to make Greece honour its commitments, said she and Hollande were "fully in line" with the agreement.
Greece's creditors agreed in February to extend its 240-billion-euro ($255bn) bailout in exchange for promises of austerity reforms by Tsipras's new hard-left government.
Athens wants the final seven-billion-euro tranche of the money to be paid out now to stay afloat, but Brussels wants more evidence of its commitment to the reforms.
Time was running out for Athens as Friday brings a key debt deadline when Greece must pay 300m euros to the IMF and redeem 1.6bn on euros in treasury bills.
Hollande urged Greece "to be more precise in its reform proposals and introduce them faster than planned."
Technical talks in Athens and Brussels which had largely stalled over the seemingly insurmountable differences between the two sides will continue as before, the statement added.
The deal is the latest in a series aimed at narrowing differences between the new Greek government, with its desire to cast aside the shackles of austerity under two previous bailouts, and sceptical creditors.