NICOSIA, Cyprus -- Cyprus has four days to agree on a new plan to raise funds to avoid bankruptcy after the European Central Bank warned Thursday it will pull the plug on the country's banks at the start of next week if no bailout deal is agreed.
Facing the ultimatum, the Cypriot government was racing to cement a new package that will please both Parliament and the country's potential international creditors.
The "Plan B" was being hashed out after lawmakers soundly defeated an earlier proposal to seize up to 10 per cent of all domestic deposits to finance a rescue of the country.

RELATED STORIES

With indications that the new plan will include restructuring Cyprus' troubled banks, including the country's second-largest lender Laiki, angry lines of people formed at some of the bank's ATMs in the center of the capital.
Banks have been shut since last Friday, and are to remain so until next Tuesday to prevent a run. Although ATMs have been functioning, many often run out of cash.
"We will have a program of support for Cyprus by Monday," central bank governor Panicos Demetriades said as he left a meeting with the country's president and political party leaders.
However, it seemed unlikely a deal would be reached in time for a vote during Parliament's regular Thursday session.
"Today, no, I don't think so," said Averof Neophytou, deputy head of the governing DISY party, when asked if a deal could be reached and voted on by the evening.
Cypriot government officials have said the new plan includes a smaller deposit grab to ease the pain on small savers, help from Russia, restructuring the country's troubled banks and raising money from domestic sources, including pension funds and subsidiaries of foreign banks active in Cyprus.
Parliamentary speaker Yiannakis Omirou, who also heads the small EDEK socialist party, said the issue of taxing bank deposits was not discussed during the meeting Thursday with President Nicos Anastasiades.
Cyprus has to find 5.8 billion euros (US$7.5 billion) in order to unlock a 10 billion euros bailout from its euro partners and the International Monetary Fund.
Russia is likely to pitch in, though its contribution will be smaller than originally hoped for, Cypriot officials have said. Nearly a third of all deposits in Cyprus' oversized banking sector are held by Russians.
Cyprus Finance Minister Michalis Sarris has been in Moscow since Tuesday seeking to forge a deal and is due to have more discussions with his Russian counterpart, Anton Siluanov, later Thursday.
"We are discussing the subjects of gas, bank cooperation and other subjects," Russia's ITAR-Tass news agency quoted him as saying. Cyprus has recently discovered significant off-shore gas deposits, and major energy companies have shown an interest in tapping those resources.
Cyprus' troubled banks have enough money until Monday after the European Central Bank said it will switch off its lifeline on Monday unless an international rescue is in place. The ECB is keeping the Cypriot banks alive by allowing them to draw on emergency support from the local central bank.
In Brussels, the head of the 17-nation eurozone's finance ministers Jeroen Dijsselbloem, said the ECB was doing "as much as they can within their mandate."
He also told lawmakers at the European Parliament that a one-time tax on bank deposits was "inevitable" given Cyprus' oversize financial sector, though said the burden should be shifted toward taxing big bank deposits of about more than 100,000 euros.
An amended bill that would have exempted deposits of under 20,000 euros in the bank was turned down by lawmakers Tuesday.