Jean-Claude Juncker, chairman of the group of euro-zone finance ministers, said that a selective default on Greek debt cannot be ruled out under a new bailout plan for the country, Dow Jones reported Thursday.
"One can never exclude such a possibility," Juncker was quoted as saying by Dow Jones.
Juncker said that the euro zone governments are trying to avoid such a default.
Euro zone leaders will meet later on Thursday to decide on the new package for Greece, which it is hoped will stop contagion from the troubled peripheral economy spreading to the rest of the euro zone.
French President Nicolas Sarkozy and German Chancellor Angela Merkel reached a common position on a second bailout of Greece Wednesday night after seven hours of talks.
Juncker also confirmed reports that a bank tax is unlikely to be part of the new aid package.
"I don't think that there will be an agreement on that," he said, according to Dow Jones.
He made the comments in Brussels, on his way to a meeting of senior euro-zone officialsaimed at narrow down options on a new Greek bailout.
The euro fell in the wake of Juncker's comments.
The agreement on the table could cut interest rates on borrowings from the euro zone's rescue fund to 3.5 percent from 5.5 percent and includes a range of options for private-sector creditors to help the debt-ridden country, Dow Jones reported, citing a person who has seen a draft statement prepared for European leaders to review.
The draft statement allows for an expanded role for the European Financial Stability Facility, the euro zone's rescue fund, according to the Dow Jones source. This would include offering more flexible lines of credit as well as possibly being involved in the recapitalization of banks.
The source quoted by Dow Jones said the talks in Brussels which Juncker attended were focused on getting private creditors to also lower their lending rates to Greece, and added that public support for Greece will continue for "at least" another 15 years.
Another person familiar with the talks told Dow Jones the details of the agreement were continuing to evolve.