Greek PM George Papandreou is trying to persuade MPs to pass further austerity measures that have sparked nationwide strikes and riots in Athens.MPs are being asked to approve 28bn euros (£25bn) of cuts, tax rises, fiscal reforms and privatisation plans.
Eurozone ministers say the legislation must be passed to receive a 12bn-euro loan Greece needs to pay its debts.
Mr Papandreou's reshuffled cabinet was earlier approved in parliament by 155 votes to 143, with two abstentions.
Last week he reshuffled his cabinet - replacing his finance minister with former Defence Minister Evangelos Venizelos - after weeks of demonstrations against his handling of the crisis.
Ahead of the vote he warned that the alternative - a default on Greece's sovereign debts and a possible exit from the single currency - would be catastrophic for Greece.
Because Greece chose to give up their currency, they have this "rescue" option which emerging market economies don't get when they run up gargantuan debts. But when Greece opened the door to a bail-out, they also closed several others. ”
As the vote was held in the early hours of Wednesday, thousands of people gathered outside Athens's parliament building to protest against both the austerity measures and politicians in general. Many chanted: "Thieves! Thieves!"Persuading parliament The confidence vote followed a heated debate that saw sections of the opposition briefly walk out. But despite the threat of a revolt within the governing Panhellenic Socialist Movement (Pasok), MPs voted strictly along party lines.
Mr Papandreou must now persuade parliament to approve a five-year package of 28bn euros of tax increases and spending cuts by 28 June.
It will then have to push through laws implementing the reforms in time for an extraordinary meeting of eurozone finance ministers on 3 July.
What went wrong in Greece?
- Greece's economic reforms, which led to it abandoning the drachma as its currency in favour of the euro in 2002, made it easier for the country to borrow money.
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Having passed the confidence vote, Mr Papandreou now faces fresh hurdles in the government's attempts to avoid defaulting on the country's debt repayments. Greece's opposition has distanced itself from the austerity measures that the EU and the IMF are demanding as a condition for new bail-out loans.Some members of Mr Papandreou's Socialist party also oppose the plan, and protesters say there will be a major day of action when parliament votes on multi-billion-dollar cuts and privatisations next week.
Mr Papandreou has called for unity, but the call is in a divided land, says the BBC's Chris Morris in Athens. Our correspondent says there are questions about whether Greece will fully implement the severe programme.
The demands of international lenders in Europe and elsewhere are straining Greece's political system here to the limit, he adds.
It would be a mistake to underestimate the determination of Europe's political leaders to protect the euro, says our correspondent. But the impression that the eurozone is stumbling from crisis to crisis - surviving with the liberal use of sticking plasters - has not yet been lifted.
'Moment of truth' On Sunday, the eurozone ministers said they would withhold the payment of the latest tranche of the European Union and International Monetary Fund's 110-bn euro bail-out package until the laws were in place.
Greece: Crucial dates
- June 28: Greek parliament to vote on a new austerity package
- July 3: Eurozone deadline: will sign off latest bail-out payment to Greece - 12bn euros - if austerity package has passed
- July 15: Default deadline: Without the 12bn euros it needs to make debt repayments, Greece will default
Greece needs the loan to be able to keep up with payments to creditors of its 340bn euros of debts, which amounts to 30,000 euros per person.The eurozone ministers also agreed on Sunday to put together a second bailout package worth 120bn euros to fund Greece into late 2014.
The new aid package, to be outlined by early July, will include loans from other eurozone countries. It will also feature a voluntary contribution from private investors, who will be invited to buy up new Greek bonds as old ones mature. Officials said this money had to be freely given, or it would be seen as technical default on Greece's debt repayments.
The objective of Mr Papandreou, the EU and IMF is to reduce the Greek government's borrowing needs and make its debt sustainable.
Many in the financial markets expect that Greece will at some stage fail to repay its debts in full and on time, even if Mr Papandreou manages to maintain the repayments for the immediate future, he adds.
If Greece were to default on its debt - worth 150% of its annual GDP output - it would have to leave the 17-member eurozone and trigger massive losses for European banks that hold Greek debt, including the European Central Bank.