Greece will hold a referendum on July 5 on the latest debt deal proposed by international lenders, Greek Prime Minister Alexis Tsipras said in a televised address to the nation in the early hours of Saturday.The leftist leader made the dramatic announcement a few hours before a critical Euro Group meeting in Brussels, amid heightened anxiety over a possible Greek default next Tuesday that could potentially spark its exit from the eurozone.

"We are obliged to respond to the ultimatum based on the sovereign will of the Greek people," he said at the end of an emergency cabinet meeting called Friday evening upon his return to Athens from marathon negotiations in the Belgian capital.

The Greek prime minister said that his government did its best to reach a viable solution to put an end to austerity under the mandate they received at the January 25 general elections.

He said the Greek side was asked on Thursday to accept a draft proposal that undermines efforts to restore growth and social justice, adding that his suggestion for the conduction of the referendum on whether the proposed agreement with creditors should be accepted or not was unanimously accepted by the cabinet.

He did not ask the Greek people to vote no, but his message was crystal clear by the wording.

"We need to respond to authoritarianism and harsh austerity with democracy, cool-headedness and decisiveness. Greece, the country which gave birth to democracy, must send a strong democratic reply to the European and international community," he said.

In his televised address, the Greek leader added that he will formally ask on Saturday for the extension of the Greek bailout program that expires on June 30, "so that people can make their decision without pressure and blackmails as dictated by our Constitution and Europe's democratic tradition."

Tsipras said that European leaders such as German Chancellor Angela Merkel, French President Francois Hollande and European Central Bank (ECB) head Mario Draghi as well as the Greek president and opposition political parties' leaders had been informed on the referendum plan before the address.

Media commentators in Athens said that developments could be rapid and dramatic before June 30, when Greece has to repay a 1.5-billion-euro loan installment to the International Monetary Fund with state coffers running empty.

In first comments to media after Tsipras' speech, opposition parties' MPs said they feared that the high-stakes gamble could lead to a financial meltdown and a Greek exit from the eurozone and the European Union.

The prime minister's critics talked about an irresponsible initiative that exposed the country to great risks, calling on people to support pro-European forces.

"Greece is and will remain an integral part of Europe and Europe an integral part of Greece. But Europe with no democracy is a Europe without identity and a compass," the Greek prime minister said before calling on Greeks to decide unanimously "for future generations, for the history of the Greeks, for sovereignty and the dignity of the Greek people."

The last time a referendum was called in Greece was in 1974 after the collapse of a seven-year military dictatorship when voters were asked to decide whether the monarchy should be restored. Seven out of ten Greeks voted no.

A "no" vote in the July 5 referendum would most likely lead Greece to default on its debts and a so-called "Grexit," or Greek exit from the eurozone, analysts said. According to all the latest surveys, seven out of ten Greeks want to keep Greece afloat and within the eurozone.