"The moment has come," Papandreou said, speaking from the remote Aegean island of Kastelorizo.
Papaconstantinou sent a letter formally asking for activation of the financial backstop to the finance ministers of the other euro countries, the European Commission and the European Central Bank.
"Greece is asking for the activation of the support mechanism," said the letter released by the Finance Ministry.
Papandreou said it was "a national and pressing necessity for us to formally ask our partners for the activation of the support mechanism, which we jointly created in the European Union."
The plan aims to cover Greece's immediate borrowing needs so it can continue servicing its debt and avoid default. The bailout would have to be reviewed by the European Union executive and the European Central Bank, and needs approval by all 15 of the other governments that use the euro.
Greece was asking for the plan to be activated even though details are still being worked out. "Negotiations are ongoing with the representatives of the IMF and ECB to determine the content and logistics of the plan," said a Greek government source, speaking on condition of anonymity.
"There can no longer be any credible talk of default," the source said.
Papandreou said the markets had not responded positively to Greece's austerity measures that were designed to pull the country's disastrous finances into line. The government has blamed the previous conservative administration for mismanaging the country's finances and fudging statistics in its reports to the EU.
"We inherited a ship that was ready to sink. A country bereft of prestige and credibility, which had even lost the respect of its friends and partners," said Papandreou, who came to power in October elections.
Greece and the EU had hoped that the announcement last month of a standby support plan would reassure markets that Greece was not going to default on its massive debt "and make them see reason, so we could continue financing our country with lower interest rates," the prime minister noted.
However, he said, "markets did not respond. Either because they did not believe in the will of the EU or because some decided to continue speculating. And today, the situation in the markets threatens to deconstruct, not only the sacrifices of the Greek people, but also the smooth course of the economy itself."
The rescue package would provide Greece with loans from other eurozone countries to the tune of euro30 billion at interest rates of about 5 percent, and about euro10 billion from the IMF.
In Berlin, spokesman for German Finance Minister Wolfgang Schaeuble, Michael Offer, stressed that once the Greek request was made, a group of experts, including the ECB and the IMF, would need to confirm whether Greece really needs the aid.
Offer said Schaeuble held a telephone conference Thursday with the Greek finance minister, among others, and that during the call, he insisted that Athens' financial review, being conducted with the IMF, be completed "quickly."
Offer sought to fend off domstic criticism from a German public concerned that their tax money is going to bail out another country.
"In Germany, we are required to act out of solidarity, and we will do that in order to stablize the euro," he said.
Frank Schaeffler, a member of parliament financial expert with the Free Democrats, told Germany daily newspaper Bild on Friday that "it is likely that Germany will have to provide more than euro30 billion in loans until the end of 2012. After that, it could be even more."
Offer said the request was just the beginning of the process, and that Greece has to present a viable restructuring plan that requires approval of the ECB and the other institutes involved, including the IMF.
Pressed on how long this process could take, Offer said: "We don't even know at this point how long the IMF mission will be conducting its review. The minister has voiced support for the process being as fast as possible. ... So that trust of the Greeks themselves can be restored."
Regarding German parliamentary approval for releasing the funds, Offer said he could not give any timeline. He underlined, however, that Merkel's government -- currently the majority in parliament -- supports the Greek package.
Irwin Collier, an economy expert for North American at the John F. Kennedy Institute at the Free University, pointed out given that Merkel, who has backed the package, holds a majority in parliament.
"The fact that Merkel's said she's for it, simply means that it is going to come through, although not without some hefty debate," Collier said.
Unlike France, Germany is not able to set up a supplementary budget, so it would finance its part of the bailout package through its KfW development bank, so the money will not come from the budget. Nevertheless, under German law, such a loan, regardless of how it is funded, requires parliamentary approval.
Until now, Greece had insisted it prefered to tap bond markets for its borrowing requirements and avoid calling for a rescue.
But on Thursday, borrowing costs spiralled to alarming and unsustainable levels, pushing interest rates for Greek 10-year bonds to nearly 9 percent. Investors demanded high rates because they viewed Greece as a risky borrower who might not pay.
The spike came after after Moody's credit agency downgraded the country's sovereign rating and the European Union's statistics agency Eurostat revised Greece's budget deficit in 2009 to 13.6 percent of gross domestic product from 12.9 percent, and said it could be further revised by up to 0.5 percentage points.
The level is more than four times the EU limit set for the 16 countries that use the euro, which has been badly hit by the Greek financial crisis. Athens insisted its target of reducing its deficit by at least 4 percentage points in 2010 remained unchanged.
The interest rate gap, or spread, between Greek 10-year bonds and German ones -- considered a benchmark of stability -- began to narrow rapidly on the announcement that Athens was asking for the aid, falling to 5.11 percentage points from Thursday's alarming highs of 5.86 percentage points.