The Greek parliament has voted to adopt a law that provides for the dismissal of 15,000 civil servants as part of austerity measures imposed by the country's international creditors.
After heated debate late on Sunday, 168 deputies voted for the bill, with 123 voting against and one abstaining.
The new law will overturn what had been a guarantee for workers in Greece's bloated civil service of a job for life.
Around 800 people turned up outside the parliament to protest against the measure in a demonstration called by trade unions.
The bill provides for the dismissal of 15,000 civil servants by the end of 2014, including 4,000 this year, to meet conditions set by Greece's creditors for billions in bailout loans.
Civil service trade confederation Adedy condemned what it called the "politicians who are dismantling the public service and destroying the welfare state".
Private union GSEE said the bill would only worsen Greece's dire unemployment rate, which currently stands at 27 percent.
Shrinking the public service is a condition set by Greece's so-called troika of creditors - the International Monetary Fund (IMF), European Union (EU) and European Central Bank (ECB) - to unlock loans amounting to $11.4bn.
The EU and the IMF have committed a total of $313bn in rescue loans since 2010, with the heavily indebted country obliged to pursue austerity measures in exchange for the international aid it needs to avoid bankruptcy.
The new law will speed dismissal procedures, which previously made it impossible to sack civil servants and saw the public sector swell over the years as every new administration brought in its own people.
|Follow our comprehensive Euro Crisis spotlight coverage
The new law also extends weekly working hours for teachers, opens a number of professions to competition and reduces a controversial property tax by 15 percent.
Following parliament's approval, senior eurozone officials will meet on Monday to approve overdue payment of $3.65bn in rescue loans, Yannis Stournaras, Greece's finance minister, said.
Eurozone finance ministers will then meet on May 13 to release a further $7.8bn installment, he added.
Greece needs that money to pay wages, pensions and bonds held by the ECB Bank that mature on May 20.
The law implements an agreement Greece struck with EU/IMF inspectors earlier this month, which allowed them to state that the country was on track to meet its bailout targets.