The deal does not require Greece to impose any new austerity policies, Prime Minister Antonis Samaras insisted, as he outlined a series of relief measures for the most needy.
"Today a long period of tribulations has ended, and a new beginning is being made," Samaras said.
Greece has depended on its bailout from other European countries and the International Monetary Fund since mid-2010. Payment of the rescue loans depend on the country meeting criteria in spending cuts, tax increases and reforms. Greece's progress in meeting the targets is reviewed regularly by the debt inspectors, collectively known as the 'troika'.
Greece began this latest round of negotiations in September. Talks had snagged on several issues, including public sector firings and market reforms.
"These were seven very, very difficult months," said Finance Minister Yannis Stournaras, adding that the text of the agreement was being written up.
Neither he nor Samaras made any mention of public sector firings, or reports the government was under pressure to allow companies to carry out mass sackings. Nor did they refer to contentious market reforms, including a proposal to allow supermarkets to sell non-prescription medication.
Samaras instead outlined a series of relief measures, including 500 million euros ($695 million) to be distributed to help more than 1 million needy Greeks, including security forces personnel on monthly salaries of less than 1,500 euros.
Other measures were cuts in social security contributions for both employers and employees to encourage hiring. Greece's unemployment stands at 27.5 per cent, the highest level in the European Union.
The prime minister also said 20 million euros would be given to services that care for the homeless, while an additional 1 billion euros ($1.39 billion) would go toward paying off the state's internal debts — for goods and services received from the Greek private sector.
"Of course, the effort continues," Samaras said. "We will become a modern European economy. A new Greece."
The austerity measures Greece has announced over a series of years have led to a backlash from labour unions, who have staged repeated strikes in protest.
Civil servants were to begin a 48-hour nationwide strike on Wednesday, while Greece's largest union has called for a general strike on April 9.