Thousands of protesters have gathered outside parliament in the capital where public transport has ground to a halt.
PM George Papandreou has said that only his 28bn-euro (?25bn) austerity plan would get Greece back on its feet.
If the package is not approved, Greece could run out of money within weeks.
Without a new plan in place, the EU and IMF say they will withhold 12bn euros of loans which Greece needs to repay debts due in mid-July.
'Declared war'More than 5,000 police officers were deployed in the centre of Athens as the protesters marched towards parliament.
The rally started peacefully, but escalated into running skirmishes on the fringes of the main demonstration.
Continue reading the main story BACK {current} of {total} NEXT Hundreds of protesters with faces covered by scarves or gas-masks started throwing stones, debris and bottles at the police in one corner of the central Syntagma Square.Police fired tear gas and stun grenades to keep them back.
Two communications vans with mobile telecoms transmitters were daubed with graffiti condemning the media and banks before being set alight by protesters who had apparently mistaken them for satellite TV trucks.
Four police officers and four demonstrators were injured in the scuffles, police said, while a number of demonstrators were treated for breathing difficulties.
Some 18 people were detained by police, Reuters reported.
There were also skirmishes as trade unionists tried to persuade anarchists to leave the square, saying their violent protests were only harming the aims of the demonstrations, says the BBC's Jon Sopel in Athens.
The general strike has halted most public services, banks are closed and hospitals are operating on skeleton staff.
Airports are shutting for hours at a time, with air traffic controllers walking out between 0800 and 1200 (0500-0900 GMT) and 1800 and 2200 (1500-1900 GMT).
A number of flights were also cancelled at Athens international airport.
Trains, buses and ferries are also affected.
In Athens, the metro is the only form of public transport which will work "so as to allow Athenians to join the planned protests in the capital", metro drivers said.
Continue reading the main story
Malcolm Brabant BBC News, Athens It was a very Greek riot, complete with an angry, Orthodox cassock-clad priest in among the anarchists.
Impervious to clouds of tear gas and flying chunks of marble, smashed by sledgehammer-wielding youths from the walls of a fountain, the priest went face to face with riot police, telling them to leave the square.
He seemed to be preaching to the converted. Although 5,000 police were supposedly deployed in Athens to protect the city centre, they surrendered Syntagma Square to the anarchists, moving back to form defensive lines around the parliament.
The promises of the Socialist government to never again allow a repeat of the riots of 2008 went up in flames.
Protesters blockaded the port of Piraeus, near Athens, which links most Greek islands with the mainland."The situation that the workers are undergoing is tragic and we are near poverty levels," said Spyros Linardopoulos, a protester with the PAME union at the blockade.
"The government has declared war and to this war we will answer back with war."
The unions are angry that the government's austerity programme will impose taxes on those earning the minimum wage, following months of other cuts which have seen unemployment rise to more than 16%.
Polls suggest that between 70% and 80% of Greek people oppose the austerity plan.
"We're opposed to what they're trying to do to us," said bank worker Kali Patouna.
"We know very well that these measures will be our tombstone. They will have extreme consequences for workers and for everyone on all social levels."
'Flawed' plansThe austerity package and implementation law must be passed in separate votes on Wednesday and Thursday.
Continue reading the main story June 29: Greek parliament to vote on a new austerity packageJuly 3: Eurozone deadline. EU will sign off latest bail-out payment to Greece - 12bn euros - if austerity package has passedJuly 15: Default deadline: Without the 12bn euros it needs to make debt repayments, Greece will defaultIf the measures are passed, the next instalment of Greece's 110bn-euro bail-out will be released by the European Union and International Monetary Fund.European officials will also start to finalise the details of a second bail-out - worth an estimated 120bn euros - designed to help Greece pay its debts until the end of 2014.
EU President Herman Van Rompuy said the impact of the Greek vote would be felt worldwide.
"There are decisive moments and the coming hours will be decisive, crucial for the Greek people, but also for the eurozone and the stability of the world economy," AFP quoted Mr Van Rompuy as telling the European parliament on Tuesday.
The BBC's Chris Morris in Athens says defeat for the government this week would send ripples of anxiety right across the eurozone, with Greece facing the prospect next month of becoming the first member state to default on its debts.
Continue reading the main storyWe are handling our country's history right now and nobody can play with that”End Quote Evangelos Venizelos Greek Finance Minister Mr Papandreou has warned that failure to secure the new loans would mean that national coffers could be empty within days.
The recently-appointed Finance Minister Evangelos Venizelos acknowledged that the cuts were "unfair", but said they were absolutely necessary.
He called on MPs to back the measures, saying both the government and the opposition were "running out of time".
"We are handling our country's history right now and nobody can play with that," he said.
But the main opposition leader, Antonis Samaras of the New Democracy party, said the thinking behind the austerity package was flawed and that tax rates should be lowered rather than raised in order to stimulate the economy.
The outcome of the debate is uncertain. Mr Papandreou faces opposition from within the governing Panhellenic Socialist Movement (Pasok), with two MPs saying they may oppose the bill.
The party has a slim majority, with 155 seats out of 300 in parliament.
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