Greece abandoned a nine-day hunt for a government on Tuesday and called a new election that threatens to hasten the nation's slide towards bankruptcy and a future outside the euro zone.

An inconclusive election on May 6 left parliament split between supporters and opponents of a 130 billion euro bailout deal which is reviled by Greeks for imposing deep wage, pension and public spending cuts.

A second election is expected to produce a similarly divided parliament, with opponents of the EU/IMF rescue consolidating their gains and raising the likelihood of an anti-bailout coalition that reneges on the deal keeping Greece afloat.

"For God's sake, let's move towards something better and not something worse," Socialist leader Evangelos Venizelos told reporters after a meeting of party leaders failed to agree on a government of technocrats. "Our motherland can find its way, we will fight for it to find its way."

European leaders have said they will halt the aid if promises given in return for the bailout are not kept. If so, Greece could go bankrupt as early as next month. Analysts say that this will almost certainly herald a Greek return to its drachma national currency.

"There is now a considerable danger that Greece simply runs out of money next month - that it can't pay wages, can't run public transport, can't maintain infrastructure and that the country just descends into complete chaos," said Jonathan Loynes, chief European economist at Capital Economics, which predicts the country could leave the currency bloc this year.