Greek workers staged a 24-hour strike forcing the transport system to a standstill in protest against the government's intensified austerity drive to secure aid to save the debt-laden country from bankruptcy.
Striking taxi drivers and bus, metro and rail workers meant commuters had to use their own cars, triggering kilometres-long traffic jams and stranding tourists at hotels in Athens' ancient city centre for several hours.
Unions said more strikes were planned.
About 1,000 members of Communist group MAS marched to parliament chanting "Resist" and "Plutocracy should pay for this crisis" as part of the first big nationwide rallies since June when daily protests ended in bloody clashes with police.
Another 6,000 students, some with black flags, and teachers joined them outside parliament. There was a big riot police deployment and the rallies dispersed peacefully.
In his first public comments on yet more austerity moves, Greek Prime Minister George Papandreou said they were vital.
"There is no other path. The other path is bankruptcy, which would have heavy consequences for every household," he said after a meeting in parliament with deputies from his ruling Socialist party.
After a "troika" including EU and IMF inspectors made clear they were losing patience with the government's failure to meet the targets of a bailout and threatened to withhold aid, the cabinet agreed on Wednesday to front-load austerity measures in a strategy expected to win them more time and money.
"For the troika at the moment it's enough and the measures will be approved by parliament. The troika will release the next tranche," Christoph Weil, a senior economist at Commerzbank, told Reuters.
Greece must now confront the trickier issue of how to collect extra taxes and implement the painful measures although commentators said the fiery opposition of the past amongst some protesters had given way to weary resignation.
Policymakers and economists fear a Greek default on its 340-billion-euro debt could set global markets tumbling and push other vulnerable euro zone members like Italy and Spain over the edge, risking plunging the West back into recession.
As well as cutting pensions and extending a real estate tax rise, the cabinet said it would put 30,000 civil servants in "labour reserve" this year, cutting their pay to 60 percent and giving them 12 months to find new work in the state sector or lose their jobs.
"This is a policy we do not tolerate, we do not want. We are in continuous, total, permanent opposition to it," said Yannis Panagopoulos, president of private sector employees union GSEE, speaking on state NET TV.
With the economy expected to contract by at least 5 percent this year, after a 4.4 percent slump in 2010, and unemployment at 16 percent and rising, most Greeks hold little hope austerity measures will help the nation emerge from crisis.
"We are living in terror that we may lose our jobs, our lives. Even if these lay-offs are necessary, we are not being treated like humans," said Costas Andrianopoulos, 32, who works at the National theatre.
"They cut our wages and our pensions and we took it. But I don't believe any more that any of this is for the good of the country. We'll be sacrificed for nothing. We can't avoid default, We have no hope."
The conservative opposition, which has a slim lead over Papandreou's Socialists in opinion polls and has called for snap elections, maintained its refusal to cooperate with the government, which has irked EU leaders.
"The euro zone's leading nations are nervous and are taking it out on us," Finance Minister Evangelos Venizelos said on Thursday, pursuing a familiar line that Greece is being made into a scapegoat for wider problems. "We must fully honour our obligations so that no pretexts can be used (against us)."
The country remains bitterly divided between private sector workers who say a bloated state bureaucracy is strangling Greeks and public servants who say the biggest problems are political corruption and tax evasion.
The new measures followed warnings from the EU and IMF inspectors that Greece must stop missing the targets of its five-year bailout plan or miss the 8-billion-euro ($11 billion) aid tranche it needs to pay salaries next month.
After more than a year of Greece consistently falling behind on its commitments, the head of an EU taskforce helping Athens said on Thursday he now saw a greater willingness by Greek officials to put the reforms in place.
But troika officials, wary of Greek government inertia, will be closely scrutinising the latest proposals to see if they are sufficient to plug fiscal gaps and can be implemented swiftly, ahead of meetings between Venizelos and finance ministers and senior IMF officials in Washington this week.
Government officials expected the measures to be passed by parliament in the next two to three weeks after they have been discussed with the troika team which is expected to return to Athens early next week to complete their review.