German lawmakers approved the proposals for leveraging the euro bailout fund on Wednesday, just hours ahead of a crucial EU summit due to be held in Brussels to find a decisive solution to the debt crisis.

In a vote held in the German Parliament lower house Bundestag, lawmakers backed the plans to increase the capacity of the EUR 440 billion European Financial Stability Facility, or EFSF, with a large majority. Out of the 596 MPs, 503 voted in favor.

The main opposition parties had earlier agreed to support a joint motion with Merkel's coalition. The chancellor delivered a speech in the Bundestag ahead of the vote.

"If the euro fails, Europe will fail," Merkel said. The chancellor said the risks arising from a leveraging of the EFSF is "justifiable".

She sought permanent monitoring for Greece by the troika and a "significantly higher" private sector participation in the country's bailout. Greece will have to adopt painful reforms, she added.

Merkel confirmed that any proposal for participation by the European Central Bank is off the table and will not be discussed at Brussels later today.

The successful vote will enable Merkel to negotiate effectively with other EU leaders at the Brussels summit, planning to prevent Greece from defaulting on its debt, thereby avoiding the spread of the crisis to other debt-laden countries in the single currency bloc.

That said, most economists are of the view that the EU summit is unlikely to produce any concrete solution to the sovereign debt crisis in the euro area. There is no consensus on how to boost the EFSF. According to reports, two options to boost the bailout fund are on the table.

RTTNews