(LOS ANGELES TIMES) — Greece’s political leaders have agreed with foreign creditors on steep austerity cuts, officials in Athens said Thursday, hours after a dangerous deadlock stalled talks on a new rescue package designed to stave off a chaotic default.

A senior official in Prime Minister Lucas Papademos’ office said an announcement would be issued shortly. Local media reported that Papademos reached an agreement with foreign lenders early Thursday after coming to a compromise with leaders of his coalition government over proposed cutbacks to state and private pensions.

The accord follows days of negotiations over demands by European Union and International Monetary Fund officials for more spending cuts by Greece to bring down its public debt and deficit levels. The European Union and the International Monetary Fund insist that the cuts are necessary for Athens to stay in compliance with terms of its 2010 bailout and for the country to qualify for a second rescue package, which it needs to avoid going bankrupt within weeks.

Note: Read our discussion guidelines before commenting.