© UnknownStrikes have been taking place across Portugal
European Union finance ministers told Portugal it would have to implement tougher austerity measure than those proposed by its outgoing government if it hoped to secure a bailout.

The minister were meeting in Budapest on Friday to discuss the sovereign debt crisis that has haunted the bloc for over a year, with Portugal the main focus of their talks.

Debt-laden Portugal on Thursday became the third eurozone nation after Greece and Ireland to request financial help from the European Union and the International Monetary Fund after a spike in borrowing costs.

Jean-Claude Juncker, the head of the Eurogroup, said the finance ministers had instructed the EU, the IMF and Portugal's politicians to negotiate the country's bailout by mid-May for implementation after June 5 elections.

"The package must be really strict because otherwise it does not make any sense to guarantee anybody's loan," Finland's Finance Minister Hyrki Katainen said.

"The package must be harder and more comprehensive than the one which parliament voted against."

Jose Socrates, the Portuguese prime minister, resigned late last month after parliament rejected a new round of budget austerity meant to help the country meet its deficit reduction targets for 2011.

He is continuing to serve in a caretaker capacity until new elections are held on June 5. The main opposition party has backed the request for aid, but agreeing cross-party consensus for austerity measures - a precondition for assistance - are likely to be difficult.

French Economy Minister Christine Lagarde said she expected Portugal to propose specific steps that would restore confidence in an economy that is among the least competitive in the currency zone.

Lisbon made a formal request for financial assistance late on Thursday but the size of any bail-out is estimated at between €75bn (£65bn) to €85bn.

The final deal is expected to be similar to that offered to Greece and Ireland. However, the British Government will not be offering Portugal a bilateral loan as it did to Ireland.

Portugal's plea for help came as the European Central Bank put up interest rates by a quarter of one per cent, putting further pressure on ailing economies within the eurozone.

George Osborne, the Chancellor, was in Budapest for the meeting. He said yesterday that Lisbon's debt crisis showed why the Government had to take firm action to tackle the record deficit in Britain's public finances.

Labour accused him of "desperate scaremongering", warning that the coalition Government's austerity programme had in fact put the UK into the group of "slow-growth" economies alongside Portugal.

And there was anger among Conservative MPs at the prospect of the UK being forced to help rescue another member of the eurozone, having already contributed emergency funding to Ireland.

The terms of a deal signed by Mr Osborne's predecessor Alistair Darling in the dying days of the Labour government, means that Britain is committed to contributing a share of any bail-out provided before 2013 under the European Financial Stability Mechanism (EFSM).

Officials at the Treasury have confirmed Britain could be required to underwrite a loan of up to about £4.4bn - 13.6pc of the €37.5bn remaining in the EFSM fund - as well as 4.5pc of any IMF loan to Portugal.

Eurosceptics argued any Portuguese bail-out should be funded from the separate €440bn European Financial Stability Facility, which involves only eurozone countries and imposes no liability on the UK.

Conservative MEPs urged Mr Osborne to block any use of the EFSM to shore up Portugal's stricken economy, arguing it was only intended to cover natural disasters.

"British voters will not accept that at home we are making tough but fair savings only to send money to countries that should never have been allowed to join the eurozone in the first place," said the leader of the Conservatives in Brussels, Martin Callanan.

He was backed by Bill Cash, the chairman of the Commons European Scrutiny Committee, which found in a recent report that the use of the mechanism for financial bailouts was "legally unsound".

"There is no legal basis on which the UK can contribute towards the Portuguese financial problem," said Mr Cash.