German Chancellor Angela Merkel on Wednesday welcomed as a "starting point" reform pledges made by Greece in return for a four-month extension to its bailout program.
"This is good news considering what was being said only weeks ago," Merkel said, adding however that "much work lies ahead" in talks between Athens and its international creditors.
Greece's new left-wing government on Tuesday secured the four-month extension -- pending approval by the Greek and German parliaments -- after promising to implement reforms and honor its financial commitments.
The breathing space beyond a Saturday deadline prevents the immediate worst-case scenario of national bankruptcy, a run on banks or even a chaotic exit from the eurozone.
"This is about Greece as well as the euro as a whole," Merkel said at a joint press conference in Berlin with Swedish Prime Minister Stefan Loefven.
"That's why I welcome that we have found a starting point for discussions with the new government. "I welcome that, through the Greek proposals received yesterday, we were able to reassert the principle of performance and reward. And that is indeed the starting point."
Recent days had shown that "we are capable of compromise," which she called a European virtue.
"Much work lies ahead, but the fact that we are now at a point, that we can call a starting point, to again extend the existing program, and that this is what Greece requested, I see that as a result of the ability to compromise shown in recent weeks ... and that's the path we must pursue now."
She added: "I'm under no illusion that the way ahead will remain challenging."
Merkel, a champion of painful economic reforms and austerity in crisis-hit EU member states, has urged her conservative party to back the bailout extension in a parliament vote Friday.
Most Germans oppose more European aid for Athens, fearing they will ultimately pay the bill.
Only 21 percent are in favor of a green light from the German parliament Friday, according to a survey by the Insa Institute for Bild daily published Wednesday.
German Finance Minister Wolfgang Schaeuble stressed earlier Wednesday that Greece will not receive "a single euro" until it meets the pledges of its existing bailout program.
Greece has already received 240 billion euros in loans via two bail-out program, the first concluded in 2010 and the second in 2012, which is the program that is set to be extended by four months.
The German press has reported on discussions within the ruling coalition in Berlin about a third aid package, worth about 20 billion euros -- but the finance ministry said Wednesday it was "too early" to discuss such a package.
"We are extending the second plan until the end of June," said ministry spokesman Martin Jaeger.
"It is currently too early to talk about a third plan. What they are doing now is to conclude the second plan successfully. All other considerations are secondary," Jaeger said.