"Our debt must be stabilised before it can begin to retreat ... I've never seen such a situation in my 29 years in parliament," he told the Ta Nea newspaper.
Papandreou last week reassured his European partners that Greece was "not about to default on its debts", which have soared to about $422bn.
But the prime minister has ruled out going to the International Monetary Fund for aid or freezing wages to bring the economic situation under control, talking instead of trimming Greece's bureaucracy.
He has also vowed to go after tax evaders, not workers.
Left-wing newspaper Eleftherotypia warned: "Adopting decisive measures is easy ... implementing them will be tougher."
Another daily, Ethnos, said any measures announced by Papandreou were unlikely to have an immediate impact on markets.
"Sadly, world markets do not base their stance on political criteria but on technocratic, and sometimes speculative, criteria," it said.
"And what is important to them is their own estimate of when the government's initiative will begin to show results."
Markets worldwide were rocked last week after Fitch Ratings downgraded Greece's long-term debt ratings to BBB-plus from A-minus last week.
This also sparked fears that other troubled eurozone members could suffer the same fate.
The European Central Bank has eased its rating requirements for government bonds in the wake of the global financial crisis but is expected to restore the minimum A-minus level in 2011.
Part of the government cost-cutting drive will target the pensions system as the state seeks to avoid paying over four billion euros next year to support ailing state funds.
But for this the government will need to get the support of the influential unions. In 2008 they protested in over attempts made then to make changes to the pension system.
Adedy, the main union representing civil servants, on Monday told the government that it must clarify its policies and warned of
"The escalation of our strike activity will be immediate and will be declared by early February," it said.