The German finance ministry has issued a response, just hours after Greece formally lodged its bid for a six-month deal to replace its bailout, which is due to expire at the end of the month.

Martin Jaeger, a spokesman for the German finance ministry, said in a statement:

"The letter from Athens is not a proposal that leads to a substantial solution. In truth it goes in the direction of a bridge financing, without fulfilling the demands of the programme. The letter does not meet the criteria agreed by the eurogroup on Monday."

Greece's new anti-austerity government is looking for a compromise to break the deadlock with its creditors, especially Germany, as it runs the risk of running out of cash in the coming weeks.

It has ruled out the prospect of any rolling deal under the terms of its previous bailout. The announcement from Germany quashes hopes of an immediate agreement being reached.

Ann Cahill, Irish Examiner Europe Correspondent joined Newstalk Lunchtime to discuss this development.

She described the situation as "unusual" - but warned that this would be the start, rather than the end of the negotiations.

Ms Cahill warns that the Greeks have not been "playing ball" and that they will have no friends at the bargaining table:

"You are looking at very conservative, mostly men with one very particular economic philosophy in mind. This has been driving the EU for the last few years - and there is no one there willing to make changes at the moment."