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STORY HIGHLIGHTS
NEW: White House, monitoring the situation, says Greece should carry on with reforms
The prime minister tries to rally deputies ahead of a government shuffle
His party's lawmakers hold an emergency meeting; opposition leader urges early elections
Greece is getting international help to deal with its budget deficit
Athens, Greece (CNN) -- Greek Prime Minister George Papandreou tried to embolden his parliamentary deputies Thursday by telling them to stand fast to the task of rebuilding Greece under a new government, yet to be announced.
"We must not flee the battle, however difficult. I have faith in our MPs, in our movement, in our historical political party. You can rely on me and I will rely on you. We will get Greece out of this crisis," Papandreou said.
Earlier in the day two members of parliament from Papandreou's ruling socialists publicly resigned, shaking confidence in his efforts to reconstitute his Cabinet.
The prime minister has come under fire for his inability to form a coalition with conservative opposition leader Antonis Samaras, who Thursday repeated a call for elections to be held as soon as possible.
Papandreou's planned Cabinet reshuffle represents an attempt to win support for additional austerity measures intended to help the economy weather the current crisis amid fears global economic confidence could suffer.
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Lawmakers from the prime minister's own Panhellenic Socialist Movement, or PASOK, are holding an emergency meeting that could see him pushed out, even as Papandreou said he planned to unveil a government reshuffle Thursday.
A confidence vote on the reshuffled government will be held Tuesday, state television reported.
Papandreou faces strong opposition from his party over the austerity measures, which are intended to bring the government deficit down in order to secure a second enormous bailout package from institutions including the International Monetary Fund and European Union.
There are fears that efforts to restructure Greece's debt could wreak havoc with Europe's banking sector, sparking a rerun of investor panic like that caused by the 2008 collapse of the Lehman Brothers investment bank.
The crisis also raises concerns for Europe's currency, the euro. If struggling nations such as Greece, Portugal or Ireland default on debts, it could knock the bloc into the red, affecting the entire world economy.
The IMF issued a statement Thursday saying it would continue to back Greece provided it carried out economic policy reforms already agreed by the government.
White House spokesman Jay Carney said the United States is monitoring the situation in Greece closely but believes its European counterparts have the capacity to deal with it.
"We consider it a headwind, if you will, in terms of the global economy and therefore the domestic economy," he said.
"So far Greece has made significant progress in terms of reforms. But it is important that the Greek government carry on with the fiscal measures and reforms that are frequently under discussion with the EU and the IMF."
The political crisis in Greece has helped send the euro down two points against the dollar over two days, while the credit default market now puts a 78 percent chance on Greece failing to pay its debts.
Many political observers were skeptical about whether Papandreou has the political authority left to form a new government.
Vasso Papandreou, a founding member of the governing PASOK party but no relation of the prime minister, said this was "a critical time for the country", as she circulated a petition among party members calling for "an immediate meeting of PASOK's parliamentary group."
Asked what would be discussed at the meeting, the lawmaker replied: "Everything."
One of the two lawmakers from PASOK who resigned Thursday, former government minister George Floridis, said both George Papandreou and the leader of the main, conservative opposition had displayed unforgivable lack of leadership in failing to form a national coalition.
"One-party governments, even if they include broadly popular figures, cannot bring about today's difficult mission," Floridis said in an open letter.
"This is not the time for bemoaning our fate and complaining," Papandreou responded in his speech. "The next government will be more effective and proceed to make the great changes that the people want and demand."
George Papandreou spoke with conservative leader Samaras by phone on Wednesday afternoon after street riots marked the introduction of a new, 28 billion euro ($39 billion) austerity bill in Parliament. But by evening their talks broke down into mutual recriminations.
The main opposition party, New Democracy, has repeatedly demanded that Papandreou quit and that a cross-party coalition renegotiate the terms of the bailout package.
Papandreou said Wednesday he would be willing to resign if he was the only thing standing in the way of a national unity government.
The government's popularity has plunged recently, and anti-government protests turned violent Wednesday, as demonstrators threw gasoline bombs at the Ministry of Finance and police fired tear gas at protesters, police said.
Tens of thousands of protesters had vowed to form a human shield around the parliament to prevent lawmakers from debating the new austerity measures Wednesday afternoon.
"This is a joke. It is all a joke," protester Christos Miliadakis, 35, said of the government plans.
"When will we be able to get out of this vicious circle? My wife lost her job. I had a 12% pay cut as a result of the first bailout. The new measures want to cut another 20% of jobs in the public sector," he said. "So if no one has money and we are just more in debt, who is going to drive the economy? We will live like slaves paying all our lives."
Architecture student Maria Iliadi, 23, said that, for people like her, "the future in this country has been erased. There will be no big public projects, and no one will be building for a long time. Sometimes, finishing my degree seems totally pointless."
About 25,000 demonstrators were on the streets of the capital by the middle of the day Wednesday, police said. Two police officers and four civilians were slightly injured, and 12 people were arrested, they said.
On June 9, the Cabinet approved a tough five-year plan for 2011-15 and introduced a bill in Parliament to put the measures into effect.
The government has said that the passage of these additional measures is essential to Greece's securing the fifth portion of a 110 billion euro ($158 billion) bailout package that Greece signed with the European Union and the International Monetary Fund to prevent the country from defaulting on its debts.
"We stand ready to continue our support for Greece subject to adoption of the economic policy reforms agreed with the Greek authorities," said Caroline Atkinson, director of external relations at the IMF, in a statement Thursday.
Finance Minister George Papaconstantinou has said the country hopes to secure a second bailout deal this month.
The search for a second bailout comes after it became evident that Greece is extremely unlikely to raise capital from private markets in 2012 due to the prohibitively high interest rates it would face.
Papaconstantinou has also indicated that European Union members may support calls to get the private sector involved.
Despite the harsh austerity measures that the Greek government has imposed, it is failing to close its budget deficit as quickly as many had hoped. The country is in recession amid its fiscal restructuring program.
The finance minister has defended the five-year austerity plan, saying it is needed to keep Greece solvent. The new measures will include a number of additional taxes and an additional 20% cut in public-sector jobs.
Protesters have been gathering outside Parliament for more than three weeks as part of an ongoing peaceful demonstration against austerity measures, with some camping in the square facing Parliament.
The credit rating agency Standard & Poor's on Monday cut Greece's rating to just two notches above default, among the lowest in the world. The agency has said a default on some debt appears "increasingly likely."
Unemployment in Greece skyrocketed to more than 16% in May, a 40% rise since last year.
The European Commission has said Greece's economy was expected to shrink by 3.5% this year

comment "When will we be able to get out of this vicious circle? My wife lost her job. I had a 12% pay cut as a result of the first bailout. The new measures want to cut another 20% of jobs in the public sector," he said. "So if no one has money and we are just more in debt, who is going to drive the economy? We will live like slaves paying all our lives." so I think this is very bad.