Greek Finance Minister Yanis Varoufakis (R) and Deputy Foreign Minister for International Economic Affairs Euclid Tsakalotos (L) arrive for an urgent cabinet meeting at Maximos Mansion in Athens, capital of Greece, June 28, 2015.(Xinhua/Marios Lolos)

The Greek government has requested more time from International Monetary Fund to repay a 1.5 billion euro loan installment that was due on Tuesday midnight Greek Deputy Prime Minister Yannis Dragassakis said on Tuesday evening.

Meanwhile, the debt laden country will submit an updated proposal for a debt deal with international creditors to the new Eurogroup talks scheduled for Wednesday, the Greek official added.

In an interview with Greek national broadcaster ERT shortly after an emergency Eurogroup teleconference ended with no result, Dragassakis revealed that the proposal Athens made earlier on Tuesday for a two year debt deal with the European Stability Mechanism (ESM) to fully cover Greece's financial needs and a parallel debt restructuring would be updated in coming hours.

The proposal which excludes the International Monetary Fund was tabled a few hours before the extended Greek five year bailout expires also on Tuesday midnight amidst increased concern over an imminent default and possible Grexit in coming weeks.

The restart of last minute negotiations between the two sides revived hopes that an agreement to unlock further vital aid to Greece could be reached in the next hours to avert dramatic developments.

People line up at an ATM outside a National Bank branch in Athens, capital of Greece, on June 29, 2015. Greek banks will stay closed before July 6, one day after a planned referendum on bailout proposals, and ATM withdrawals will be limited to 60 euros (65 U.S. dollars) a day per bank card in the same period, the government said early Monday. (Xinhua/Marios Lolos)

Greece's banks remain closed since Monday and capital controls have been imposed after the European Central Bank (ECB) freezed emergency liquidity assistance (ELA) to Greek banks in response to Athens' shock call for a referendum on the lenders' "humiliating" draft deal for the forthcoming Sunday.

The Leftist administration has urged the electorate to vote No, as European leaders, Greek opposition parties and analysts warned that the result could be interpreted as No to Greece's future membership in the euro zone.

On Tuesday evening Dragassakis said that Greece asked the ECB to consider raising the ELA mechanism cap to Greek banks and implied that Athens could call off Sunday's referendum in case an agreement is achieved in coming hours.

"This is a political issue. The government could make a different decision. We called it in order to reach a deal," he said.

The Greek government seeks a viable solution for Greece and lenders, the Greek official stressed.

Meanwhile Greek Foreign Ministry sources were strongly criticizing Spanish Prime Minister Mariano Rajoy for his comments on the Greek referendum.

"If the referendum takes place and if Tsipras loses, this would be a good thing for Greece because the Greeks will have said yes, we want to stay in the euro, and we could negotiate with another government," he said.

Greek foreign ministry sources dismissed the remark, stressing that it might be considered as an effort to overthrow a democratically elected government.