Portugal's austerity measures have sparked widespread oppositionPortugal's opposition parties have withdrawn their support for austerity policies that may lead to the Lisbon government's collapse on Wednesday.
The government's expected defeat in a parliamentary vote is likely to trigger an international financial rescue.The vote comes on the eve of a European Union summit where leaders hope to finalise a eurozone debt crisis plan.
Kevin Dunning, analyst at the Economist Intelligence Unit, told the BBC that this is "crunch time" for Portugal.
"This could be the week when they have to activate the bail-out fund," he said.
Last year Greece and the Republic of Ireland had to accept massive rescue packages after markets lost faith in their governments' efforts to deal with their debt burdens.
Portugal's financial collapse would likely spark another round of nervousness in financial markets and may revive concerns about the larger Spanish economy.
Opposition parties say the austerity plan - cuts in welfare, tax rises, and increases in public transport costs - go too far.
Prime Minister Jose Socrates has said he will no longer be able to run the country if the package is rejected.
Major international lenders have been wary of Portugal's attempts to avoid tapping eurozone bail-out funds by raising money in the debt markets.
The yield on Portugal's 10-year bond was at 7.4% Tuesday, close to recent records, an indication of investors' concerns about the country's ability to pay back its debts.
On Thursday eurozone leaders begin a two-day summit at which they hope to finalise details of a "grand bargain" to deal with the 17-nation group's debt burden.
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