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Spanish Prime Minister Mariano Rajoy is due to address parliament shortly, setting out a new raft of austerity measures aimed at balancing the budget, BBC reported.

His speech comes as hundreds of Spanish miners gather in Madrid to protest against government cuts to subsidies.

Mr Rajoy is expected to unveil a rise in VAT as well as cuts to social security and unemployment benefits.

The measures are in return for a eurozone bank bailout and an extension to Spain's deficit reduction targets.

Eurozone finance ministers have agreed to provide 30bn euros (£24bn) for Spain's troubled banks by the end of the month and to give Madrid an extra year - until 2014 - to hit its budget targets.

Analysts say European leaders want to see a credible Spanish plan for viability and deficit reduction.

Mr Rajoy warned on Saturday that further austerity was on its way, in a country with unemployment running at more than 24% and rising street protests over drastic spending cuts.

On Monday, budget minister Cristobal Montoro warned of an impending VAT rise, telling a business forum: "If VAT was paid by more of those who are supposed to pay, it would not have to be raised by so much."