The draft deal, if approved, would for the first time give the currency union tools to intervene pre-emptively and would also make it easier for the other crisis victims, Ireland and Portugal, to stand on their own feet once their programs run out.
Markets cheered the news, with stocks, bonds and the euro rallying sharply on hopes that a deal in Brussels might prove a turning point in the 18 month-long crisis.
The document, seen by the Associated Press, says that banks and other private creditors have agreed to voluntarily contribute to a second rescue package for Greece through various options.
The draft does not spell out those options, but officials have so far been discussing asking banks to swap or roll over their old bonds for new ones with longer maturities or using eurozone money to buy back Greek bonds at the current, low market prices.
Private sector involvement will come with some form of repayment guarantee or collateral. That will keep Greek banks from being cut off from emergency support by the European Central Bank.
One of the key obstacles to private sector involvement so far has been that Greek banks would be frozen out of ECB support if Greek bonds are rated at "selective default" — something that rating agencies warned would happen if banks are asked to take losses.
According to the draft, the eurozone and the International Monetary Fund are ready to give new rescue loans to Greece, without providing a number.
Eurozone leaders also plan to ease the loan conditions for their part of the bailout, by doubling the average loan maturity for Greece to 15 years from 7 1/2 years currently and reduce the interest rate to 3.5 percent.
Those softer loan conditions would also apply to the other bailout victims Ireland and Portugal.
However, the draft tried to draw a clear line between Greece and other struggling eurozone countries. "Greece is in a uniquely grave situation. This is the reason why it requires an exceptional solution," it says.
To help make markets see that distinction, the draft statement foresees a radical overhaul of the eurozone's bailout fund, the European Financial Stability Facility, giving it powers that would allow it to intervene pre-emptively, before a country is in full-blown crisis mode.
For instance, countries could be given a precautionary line of credit. That might allow states under stress, such as Spain, to continue raising money on the markets, giving an extra assurance to investors, and could also make it easier for Ireland and Portugal to re-enter the markets once their bailout programs expire.
Money from the EFSF could also be used in certain situations to recapitalize banks in countries that have not yet been bailed out, the draft says.
On top of that, the EFSF should be authorized to buy up bonds on the open market as long as all eurozone countries agree, according to the draft. Such secondary market intervention could support sovereign bonds experiencing a sell-off by investors.
A eurozone official warned that the draft was "definitely not final" and that "anything can change."
Even though initial market reaction to the draft deal was positive — the euro traded up 0.8 percent at $1.4371 after it had slumped earlier in the day — some analysts warned it won't constitute a turning point in the eurozone's debt saga.
"From what we can see, there are still couple of major shortcomings," Jonathan Loynes, chief European economist at Capital Economics in London, said in a note. The deal would reduce Greece's near-term financing needs, but won't significantly lower the overall debt burden, Loynes said, adding that "there is no 'shock and awe'," that would boost market confidence in the eurozone as a whole.