Bankers representing Greek bondholders say they have presented Eurozone leaders with a "significant" new offer to take losses on their debt to help the trouble country tackle its debt burden.
A spokesman for the Institute of International Finance (IIF), which is leading negotiations, said in a statement: "A significant new offer was made by Mr. Charles Dallara, IIF managing director, on behalf of private investors in discussions yesterday.
"The offer was for a debt exchange on a voluntary basis in support of Greece. I am not able to elaborate at this point."
The offer came as Eurozone leaders prepared for last-ditch talks to solve the sovereign debt crisis engulfing the region.
German Chancellor Angela Merkel won a parliamentary vote of support for strengthening the rescue fund after warning in a dramatic speech that Europe was facing its most difficult situation since the end of World War Two.
"If the euro fails, then Europe fails," she declared, saying there was no certainty that the continent would then enjoy another 60 years of peace.
Merkel earlier told parliament that private bondholders would have to take a substantial write-down so that Greece's debt could be reduced to 120 percent of gross domestic product by 2020 from 160 percent this year.
Experts say that implies a 50 percent "haircut" for private investors, which Greek finance minister Evangelos Venizelos was reported to have told Greek banks was the most likely outcome.
Jean-Claude Juncker, the chairman of Eurozone finance ministers, forecast an eventual deal on a 50 per cent write-off but officials said it might not be sealed on Wednesday and the banks wanted a menu of options for the bond swap rather than a single solution.
While there is consensus on the need for European banks to raise around €110bn (£68.8bn) in extra capital to withstand a potential Greek debt default and wider financial contagion, other critical issues remain sticking points.
There are still uncertainties over complex plans to scale up the region's €440bn bailout fund, known as the European Financial Stability Facility, without allowing it to draw on the ECB.
One proposal set to be adopted involves creating a special purpose investment vehicle (SPIV) to tap foreign sovereign and private investors, such as Chinese and Middle Eastern wealth funds, to buy bonds of troubled Eurozone countries.
How far private investors can be persuaded to write off the value of Greek debt is also yet to be decided.
Investors stayed cautious, with the euro surrendering earlier gains and inching higher against the dollar and European shares flat on the day.