A request for financial aid has been sent from Portugal to the European Commission.
Caretaker Portuguese prime minister, Jose Socrates, has told the nation the move had become inevitable because of accumulated debt.
Speaking in a televised address to the nation, Socrates said he had tried everything to ensure the country could continue without the monetary input but he could no longer take the risk with Portugal’s economy.
He said Portugal would need to resort to the European Union in order to avoid defaulting on its debt.
European economic heads have said the move by Portugal is a responsible one.
Lisbon will now request between $86 billion and $115 billion from the EU and International Monetary Fund in loans which will be subject to strict conditions.