"The referendum was never an end in itself," George Papandreou told the cabinet according to statements released by his office and reported by Sky News.
"We had a dilemma - either true assent or a referendum. I said yesterday, if the assent were there, we would not need a referendum."
Papandreou had been under pressure to stand down, as a split emerged in his government over the plans to hold a public vote on the rescue deal.
He now says he has no intention to quit, but will hold talks with the opposition over their calls for a transitional government and early elections.