A man withdraws sixty Euros, the maximum amount allowed after the imposed capital controls in Greek banks, at a National Bank of Greece ATM in Piraeus port near Athens, Greece June 30, 2015.[Photo/Agencies]

ATHENS - Greece's government proposed a two-year debt deal with the European Stability Mechanism (ESM) in a last-minute bid to avert the countdown to default and a possible Grexit, Greek Prime Minister Alexis Tsipras' office said on Tuesday.

According to government sources, at the same time Tsipras was ready to travel to Brussels even later on Tuesday to discuss the proposal with European partners.

"The Greek government proposed today a two-year agreement with the ESM to fully cover its financial needs, and a parallel debt restructuring," the e-mailed announcement said.

"The Greek government will seek until the end a viable solution within the euro zone. This is the message of No to a bad draft deal proposal on Sunday," the statement added.

The Greek government stressed that the decision to call on Saturday a referendum for July 5 on the draft agreement lenders made last week "was not the end of negotiations."

The messages from European leaders on the interpretation of the referendum's outcome varied.

Some warned that a No to the creditors' deal proposal means No to euro and would make even more difficult any future deliberations. German Finance Minister Wolfgang Schaeuble said on Tuesday that Greece will remain in the euro zone -- at least for the time being -- even if No prevails.

Greece remains at the negotiating table, concluded the statement.

It was issued just a few hours before the extended Greek bailout expires on Tuesday midnight amid increased concern over a looming default and possible Grexit.

Earlier on Tuesday Greek Finance Minister Yanis Varoufakis had said that Athens will not repay the loan installment due to International Monetary Fund Tuesday.

The Greek minister appeared hopeful that a deal could be reached at the last moment amid media reports that a frenzy round of negotiations had resumed since Monday night.

Greece's failure to meet its financial obligations to IMF for a second time in a month and pay off 1.5 billion euros (1.67 billion US dollars) in loan installments to the Fund could launch formal procedures to default in coming weeks.