Greek Finance Minister Yanis Varoufakis has said he is "optimistic" of a deal ahead at a crunch meeting of euro zone ministers in Brussels.
His comments came as the German government softened its tone on Greece ahead of the talks saying there was a good basis for further discussions.
German Finance Minister Wolfgang Schaeuble had firmly rejected Athens' latest request for a bailout extension.
Mr Schaeuble surprised his European partners and German cabinet colleagues yesterday by dismissing a letter from his Greek counterpart as a stealth attempt to win more aid without committing to agreed budget and reform targets.
But ahead of the meeting of euro zone ministers today, Chancellor Angela Merkel distanced herself, through a spokeswoman, from the confrontational tone used by Mr Schaeuble.
However at the same time, she praised her minister and describing the government as fully united.
"The letter from the Greek finance minister makes clear that Greece remains interested in support from the European Union," Christiane Wirtz said. "This letter is a good signal which allows us to continue to negotiate."
She added that euro zone finance ministers meeting in Brussels today would "continue to negotiate on this basis" and that the talks would "hopefully lead to an agreement with Greece".
Asked whether Ms Merkel supported Mr Schaeuble, a veteran 72-year-old conservative who has more leeway than other ministers to speak his mind, Ms Wirtz said the minister was doing an "excellent job in this crisis and in the negotiations with Greece".
His outright rejection of the proposals from Mr Varoufakis underscored the mistrust between Berlin and Athens that has developed since leftist Alexis Tsipras rode to victory in an election last month vowing to row back austerity measures favoured by Berlin and its euro allies.
It prompted Mr Tsipras to call Ms Merkel yesterday evening.
They spoke for nearly an hour and although the German government declined to give details of their conversation, Ms Wirtz said Berlin did not dispute Mr Tsipras's description of the talks as constructive.
Greece's current bailout programme runs out at the end of this month. If by then it has not clinched an extension, experts fear an acceleration of capital outflows would cripple its banks, triggering an unprecedented exit from the euro zone.
German magazine Der Spiegel reported that officials at the European Central Bank had begun preparing contingency plans for a so-called "Grexit".
While Mr Schaeuble has made clear he believes the euro zone could weather such a step, Ms Merkel and Germany's European partners may be more reluctant to take that risk.
Greece and the euro zone have one final chance to strike a deal on the country's debt to avoid a potential default and, just as possible, a Greek exit from the euro.
Athens yesterday submitted what is essentially a take-it-or-leave it request, although the letter to the chair of the eurogroup of finance ministers is a significant climbdown from its earlier position.
Greece says it will honour all of its debt obligations, will cooperate closely with EU institutions and the IMF, and that it will not take any unilateral decisions that would push its fiscal targets off course.
However, the letter also says that the terms of the new arrangement should be "mutually acceptable".
It is understood that Germany sees in that phrase sufficient ambiguity to raise objections.
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