Dramatic events in Greece yesterday: As tens of thousands protested against the new austerity plans George Papandreou offered to step down in favour of a new unity government. But talks with the conservative opposition failed and George Papandreou announced instead a cabinet reshuffle and a vote of confidence in Parliament, Kathimerini reports. Papandreou had reportedly refused to accept the opposition's condition to renegotiate the aid deal.  After the talks failed, opposition leader Antonis Samaras blamed the government for the failure and asked for early elections saying on television: "It is clear that the only one who can deliver a solution now is the Greek people," Reuters reports.  Analysts say that if Papandreou wins the confidence vote today, there might be no early elections and the chances increase that there is a sufficient majority in parliament to adopt the austerity plan.

To secure the support of the majority George Papaconstantinou had offered on Wednesday to soften some of the austerity measures, including not hiking the tax on heating fuel and keeping the tax-free threshold on property at €200,000 rather than €100,000, according to Reuters.  

Papaconstantinou is likely victim in the cabinet reshuffle. BBC News quotes analysts saying the post is likely to be filled by Lucas Papademos, former vice president of the ECB.