BRUSSELS/ATHENS--European Commission President Jose Manuel Barroso urged EU member states on Friday to agree a standby aid package Greece after Athens said it could turn to the IMF for help.

Barroso said the 16 countries that share the euro currency should be ready to make coordinated bilateral loans to Greece to help it reduce its budget deficit and refinance its debts, which are nearing 120 percent of gross domestic product.

In a move that appeared designed to shake EU member states into action and in particular to win German backing for a rescue package, Barroso said the situation could not be allowed to be go on for much longer and action was needed rapidly.

"The European Commission is ready to make a proposal for an instrument for coordinated assistance for Greece," the head of the European Union's executive said in a statement in Brussels. "Such an instrument will be constituted by a system of coordinated bilateral loans and will be compatible with the (euro zone's) no bailout clause and with strict conditionality."

EU leaders will discuss the issue at a summit in Brussels on March 25-26 after Greece said it could not deliver promised deficit cuts if its borrowing costs remained so high and that it may have to seek help from the International Monetary Fund.

Barroso did not say how much aid Greece would need but diplomatic sources put the figure at up to 22 billion euros. Athens has not requested any aid and hopes it will not need it.

But Barroso said Greece's situation could not be allowed to go unchecked and that EU member states, and specifically the euro zone, must work together rapidly. "Our objective is an instrument designed within the euro area with conditions and management established by the euro area and its institutions," he said. "I urge all member states to agree as soon as possible on this instrument. We believe we cannot prolong any further the current situation."

Barroso said creating such a support mechanism did not imply that it would be activated immediately. He declined to discuss whether the IMF would contribute to the scheme but European diplomats said the Commission has not ruled this out.

Despite the EU's verbal assurances of support, investors fear it could prove impossible to construct a euro zone financial safety net for the currency area's most heavily indebted member, largely because of German reluctance. Market doubts about a rescue plan pushed the euro to a one-week low on Friday while the premium investors demand to buy 10-year Greek government bonds continued to rise.