Greek prime minister Alexis Tsipras has confirmed that Sunday's referendum will go ahead as planned, quashing rumours that it would be scrapped.

In a televised address to the nation he backed a No vote and claimed that such an outcome would result in better terms for the Greek people.

Hitting back at the Council of Europe, which has said that the conditions of the referendum fall short of international standards, Tsipras said: "I never expected a democratic Europe not to give space and time [to hold a referendum]. It is a disgrace that we have these scenes of shame because they closed the banks precisely because we wanted to give the people the vote."

He added that, contrary to several European officials, the referendum will not act as a plebiscite on Greece's Eurozone membership.

"They say I have a supposed plan that if you vote No I will take you out of Europe, they are wrong."

Tsipras claimed that the Greeks are still at the negotiating table and a deal could potentially move forward depending on the outcome of today's Eurogroup meeting of finance ministers.

Reiterating his call for a No vote, he said: "No does not mean rupture with Europe but return to a Europe with values. No means strong pressure for an agreement of social justice, that will punish corruption."

The speech came amid a day of tension that has seen German chancellor Angela Merkel reject a last-minute bid from Tsipras to unlock bailout funding.

Speaking in the Bundestag, the German parliament, Merkel said that there can be no fresh negotiations until after Sunday's referendum.

Her remarks came after it emerged that Tsipras yesterday sent a letter to the troika – the European Union, the European Central Bank and the International Monetary Fund – outlining amendments to a cash-for-reforms deal aimed at unlocking around €15.5bn ($17.2bn) in bailout money.

In it, he put forward reform proposals relating to pensions, VAT and labour laws.

Germany's finance minister Wolfgang Schäuble has hit out at Tsipras, saying: "The Greek government is not doing its people any favours at all if it keeps making completely false statements. Nobody else is to blame for their situation."