Former Greek Prime Minister George Papandreou has announced the formation of a new party about three weeks before a snap national election on January 25.

Papandreou, the son and grandson of prime ministers, unveiled the Movement of Democrat Socialists on Saturday in front of thousands of supporters.

He presented himself as a determined reformist against the old "corrupt" system that brought the protracted financial crisis to Greece.

Papandreou led the PASOK party, founded by his father in 1974, from 2004 to 2012 and as prime minister from 2009 to 2011, he bore the brunt of the crisis and the onus of signing a bailout deal, which, although it prevented Greece from defaulting, is detested by many because the economy shrank by over a quarter and unemployment soared to record levels.

Left-wing ahead

The snap election was called after the government failed to gain enough votes to elect its preferred candidate for president, the former European Commissioner Stavros Dimas.

The Greek left-wing leader ahead in polls before upcoming elections said on Saturday his party's victory would start "necessary change" in Europe and stressed he would end austerity policies.

Greece: End of austerity?

Alexis Tsipras, head of the Syriza party, said in a speech in Athens that "necessary change in Europe begins here, in Greece".

He named Spain, where the leftist Podemos party has led in polls ahead of elections later this year, and Ireland as countries that could follow.

Tsipras, whose party has led by between three and six points in the polls, said he wants to make Greece a "positive example of progressivism in Europe."

"With vigorous negotiations, we guarantee our country's truly equitable participation in the eurozone," he said. "We must finish with austerity."

Tsipras has previously pledged to reverse reforms imposed by Greece's international creditors and renegotiate its bailout deal.

The European Union and the International Monetary Fund have overseen two massive international bailouts for Greece after its debt crisis nearly brought down the eurozone.

EU leaders have urged Greece not to change course and abandon reforms.

However, Germany's Der Spiegel news weekly reported that Chancellor Angela Merkel is prepared to let Greece leave the eurozone if the new government abandons austerity.

"The German government considers a eurozone exit [by Greece] to be almost inevitable if opposition leader Alexis Tsipras leads the government after the election and abandons budgetary discipline and does not repay the country's debts," Der Spiegel reported on its website, citing sources close to the German government.

Source: Agencies