Two officials close to Greek Prime Minister George Papandreou say he has scrapped his plan to hold a national referendum on the latest European rescue plan for Greece.
The news comes after main opposition leader said he would back the vote.
Meanwhile, President Barack Obama arrived in Cannes, France, Thursday for the latest gathering of leaders from 20 of the world's largest economies.
But the atmosphere at this year's G20 economic summit will be anything but festive as the leaders grapple with debt caused by massive overspending in nations throughout Europe.
At the heart of Europe's economic crisis is Greece, which stands on the verge of bankruptcy.
The European Union approved a bailout plan with strong debt control measures.
On Tuesday, Papandreou said that rather than accept the plan, he would put it to a nationwide vote.
"I believe it's crucial that we show the world that we can live up to our obligations," Prime Minister George Papandreou said.
The Greek decision to hold a vote rattled markets around the world. In just two days this week the average U.S. 401k lost $5,600.
"This referendum probably isn't going to happen until next year, and then there's the risk -- well, if they don't vote for the bailout, what happens next?" said David Jones, chief market strategist for IG Index in London.
"So when we all thought it was 'done and dusted' last week, it's all been thrown completely back in the air again," he said.
The mountain of Greek debt may force the country to abandon the euro and return to the old currency, the Greek drachma -- a move that doesn't sit well with people on the streets of Athens.
"Euro, euro euro. All of Europe has the euro. Why should we go back to the drachma?" one protester asked.
While the Greeks try to hold on to their European lifeboat, polls in a number of countries, including Britain and the Netherlands, show that resistance to the European Union is growing -- a development that won't make this week's meeting in Cannes any easier.