Greek prime minister Alexis Tsipras hailed the "important success" of Greece's negotiations and what he called "the end of austerity and the bailout" but warned Greeks that difficult negotiations lie ahead.
"We won a battle, but not the war. The difficulties lie ahead of us," Mr Tsipras said in a TV appearance made on very short notice.
The Greek government is facing a Monday deadline to come up with credible reform proposals to extend the existing bailout deal and the drafting of a new one.
Mr Tsipras will meet his inner cabinet later today to discuss the proposals.
Yesterday's agreement to extend the country's rescue loans, although conditional, was greeted with relief by many people as a first step forward and away from the crushing austerity of recent years.
Others were more sceptical, wondering whether the left-wing Syriza government will be able to keep even a fraction of its promises and how it will find the money to finance them.