The eurozone bailout fund will see its firepower increased to more than 1 trillion euros (£869 billion) to enable it to contain the Eurozone debt turmoil, German government sources said today.
Eurozone governments hope the European Financial Stability Fund, or EFSF, will be able to protect countries like Italy and Spain from being engulfed in the debt crisis.
To do that, however, it needs to be bigger or see its lending powers magnified.
Frank-Walter Steinmeier, parliamentary leader of the opposition Social Democrats, and Greens leaders Cem Oezdemir and Juergen Trittin said chancellor Angela Merkel told them that the EFSF's lending powers will be boosted significantly.
"There will be a leveraging of the EFSF. It is clear that this leveraging will be around a level beyond one billion (euro)," Mr Trittin said.
That would be achieved through a combination of measures. The fund would insure investors against a percentage of possible losses on eurozone government bonds and the plan also involves the participation of outside organisations such as sovereign wealth funds and the International Monetary Fund.
The chancellor briefed MPs about the progress of the eurozone rescue plans following the weekend's EU summit.
Because of the move's significance, members of Ms Merkel's party proposed that the change receive full parliamentary approval on Wednesday - although it would have been enough for the parliament's budget committee to approve the plan.
Volker Kauder, the parliamentary leader of Ms Merkel's conservative bloc, said the decision to seek a vote was "nothing extraordinary" because "questions of fundamental significance must be decided in parliament."
Beefing up the bailout fund is one part of a three-pronged eurozone plan to solve the crisis.
The other two parts are reducing Greece's debt burden so the country eventually can stand on its own and forcing banks to raise more money so they can take losses on the Greek debt and ride out the financial storm that will entail.
Getting Greece's private bondholders to take deeper losses to lighten the country's deb load is proving particularly difficult. Experts agree that Greece needs to write off more of its debt if it is ever to make it out of its debt hole. But many also say such a deal with private creditors needs to be voluntary. Imposing sharp losses against the banks' will could trigger massive bond insurance payments that could cause panic on financial markets.
While European governments finalise their comprehensive plan, the European Central Bank has been taking on the role of fire-fighter by buying the bonds of financially weakened governments on the open market. That keeps the bond prices up and the rates down, allowing the countries to borrow on financial markets at lower rates than they otherwise could.
French Finance Minister Francois Baroin said France, in a bid to "avoid tensions," has agreed to abandon its push to turn the EFSF into a sort of bank that would give it access to the ECB's unlimited source of money. The idea clashes with German traditions of economic management and fears of printing money to pay for the governments' debt.
"We know that the Germans don't want this," he said.
Differences between Germany and France have been blamed in part for the failure of talks last week and an EU summit on Sunday to produce a comprehensive new plan to stem the eurozone's debt crisis.