The plan calls for creating a "labor reserve" and putting 30,000 workers in it by the end of the year. The workers would still be paid 60% of their salary for another year and then be let go.
Greece was expected to unveil its plan on Sunday to begin laying off state workers, the most contentious part of a reform package demanded by the EU and IMF to free up loans and stave off bankruptcy.
Without the release of an 8 billion euro ($10.7 billion)tranche of an EU bailout, massively indebted Greece could run out of money to pay state wage bills within weeks.
European officials are scrambling to avert a Greek debt default, which could wreck the balance sheets of European banks, damage the prospects of the euro single currency and possibly plunge the world into a new global financial crisis.
A senior member of the ruling coalition in Germany, Europe's paymaster, said it may be necessary for Greece to abandon the euro, a prospect European governments officially reject as beyond consideration.
Negotiators from the International Monetary Fund, European Union and European Central Bank, known as the troika, have returned to Athens after walking out of talks a month ago, and have met Greek officials for the past four days.
To persuade the troika to release the loans, the government has promised to introduce new taxes, cut state wages by an average of 20 percent and reduce the number of public sector workers by a fifth by 2015.
The austerity measures are deeply unpopular, and public sector unions hope that strikes and demonstrations can wreck the Socialist government's resolve to enact them.
Fully 20% of Greek employment is in the public sector. Their jobs are guaranteed for life by the constitution. If the government can't change this culture of dependence on government for jobs - for life itself - there is no hope for Greece and the troika may as well pack up and go home, allowing the country to work out its own downfall in ways that would be best for its own people.
What the EU can do is build a firewall around banks over exposed to Greek debt, and nations like Portugal and Ireland - and especially Italy - who might take a tumble also because of any Greek default and withdrawal from the euro. In the long run, it will be cheaper than constantly bailing out a nation that doesn't want to reform its ways in order to save itself.