Greek MPs have passed a series of painful new austerity measures into law aimed at saving the country's economy from collapse.

The reforms, including tax hikes and pensions, were backed, despite significant opposition inside the prime minister's left-wing Syriza party.

The package passed with 229 votes in favour and 64 votes against in the 300-seat chamber.

38 Syriza politicians abstained or voted against, including former finance minister Yanis Varoufakis, Energy Minister Panagiotis Lafazanis, Deputy Labour Minister Dimitris Stratoulis and speaker of parliament Zoe Constantopoulou.

The bill had to pass in order for Greece to start negotiations with creditors on a third bailout worth €86bn over three years.

But the reforms will condemn the Greek people to more years of economic hardship.

Prime Minister Alexis Tsipras, who got the reforms through with the help of pro-European opposition parties, said it was the best possible deal he could get from the creditors to prevent Greece being forced out of the euro.

But there were angry scenes in parliament, with Golden Dawn MP Ilias Kasidiaris ripping up his papers in disgust and throwing them across the chamber.

As MPs debated the bill, thousands of anti-austerity demonstrators marched through central Athens, waving banners reading "Cancel the bailout!" and "No to the policies of the EU, the ECB and the IMF (creditors)".

At a rally involving around 12,000 protesters outside parliament, some threw petrol bombs and stones at riot police.

Officers responded by firing tear gas to push back groups of youths who were hurling Molotov cocktails from within the crowd in Syntagma Square.

Newstalk.com's Shona Murray is in Athens.

She told Newstalk Breakfast Mr Tsipras was not due to speak - but due to the criticism he faced, he defended himself.

Civil servants also showed their opposition to the reforms with a 24-hour strike that disrupted public transport nationwide.

The vote came after one of Greece's major creditors cast doubt over whether the overall package of measures - which includes a foreign takeover of state-owned businesses - would be enough to ensure the country recovers.

The International Monetary Fund (IMF) said Greece has taken on too much debt and will be unable to keep up its repayments even after the new deal.

It said Greece's debts will peak at 200% of the country's economic output in the next two years.

The organisation said the only way Athens could emerge from the crisis was if some of its debts were restructured - possibly by extending the period of repayment or even by writing off some of them.

The austerity measures put to the Greek parliament, which were just the first of a number of laws that will have to be passed before the bailout will be fully approved, included:

• An increase in VAT on all goods and services.
• Ending the VAT reduction for the Greek islands and a series of other tax rises.
• Making the Greek statistics office independent and introducing a mechanism that automatically restrains spending if it gets too high.

Greece's finance ministry said the banks - which have been shut since June 29th - would remain closed until at least Thursday, but some would open to allow payments to the state.

Bailout negotiations are expected to take around a month, with European finance ministers rushing to find ways to get Greece money sooner.

The European Commission has proposed giving Greece €7bn in loans from a special fund overseen by EU nations so it can meet its upcoming debts.

The loan would be made pending the start of a full bailout program.