The International Monetary Fund has told eurozone finance ministers they must immediately begin negotiations to grant debt relief for Greece despite German opposition, upending carefully orchestrated negotiations ahead of an emergency meeting on Monday.

In a letter to all 19 ministers sent on Thursday night and obtained by the Financial Times, Christine Lagarde, the IMF chief, said stalemated talks with Athens to find €3bn in “contingency” budget cuts, which have gone on for a month, had become fruitless and that debt relief must be put on the table immediately, or risk losing IMF participation in the programme.

“We believe that specific [economic reform] measures, debt restructuring, and financing must now be discussed contemporaneously,” Ms Lagarde wrote. “For us to support Greece with a new IMF arrangement, it is essential that the financing and debt relief from Greece’s European partners are based on fiscal targets that are realistic because they are supported by credible measures to reach them.”

The IMF has come under intense criticism in Greece, where senior officials in Alexis Tsipras’s government have blamed Poul Thomsen, the IMF’s European chief, for making excessive austerity demands and holding up an agreement on the €86bn bailout’s first review.

But Ms Lagarde’s letter makes clear the IMF wants less austerity, arguing that the budget surplus target agreed last year between the EU and Athens — a primary surplus of 3.5 per cent of gross domestic target by 2018 — is unrealistic and should be drastically reduced.

A primary surplus is a country’s budget surplus when debt payments are not included.

“A clarification is needed to clear unfounded allegations that the IMF is being inflexible, calling for unnecessary new fiscal measures and — as a result — causing a delay in negotiations and the disbursement of urgently needed funds,” Ms Lagarde wrote.

Originally, Monday’s eurogroup meeting, which was to be held last week but was rescheduled after negotiations stalled, was seen as a make-or-break session, with both sides needing to reach a deal before Britain’s EU referendum campaign intensifies next month before a June 23 vote.

Athens is facing €3.5bn in debt payments in July that it needs bailout aid to pay, and EU officials have told Greek government officials they do not want messy negotiations to continue during the Brexit campaign — meaning if no agreement is reached this month, leaders will not begin discussions again until just weeks before a possible default.

Similar last-minute talks a year ago rattled the Greek economy and raised questions about whether Greece could be ejected from the eurozone.

Relations between the IMF and Athens, already strained after last year’s brinkmanship, have reached a new low in recent weeks following WikiLeaks’ publication of a transcript of a private teleconference between Mr Thomsen and other IMF officials — a transcript Greek officials claimed showed the IMF was negotiating in bad faith.

Athanasios Papachristopoulos, a Greek MP from the junior coalition member in Mr Tsipras’s Syriza-led government, on Thursday appeared to admit the recording was made by Greek authorities and given to WikiLeaks. Mr Papachristopoulos told the Greek parliament the government had decided to “blurt out” the transcript, though he later went on national television to insist he was misinterpreted.

In her letter, Ms Lagarde wrote that all sides have nearly agreed on a core set of economic reforms that would cut the Greek budget by 2.5 per cent of GDP by 2018. Some officials believe that list could be finalised at Monday’s eurogroup meeting.

But Ms Lagarde stuck by the IMF’s assessment that such reforms would only produce a primary surplus of 1.5 per cent in 2018 — not the 3.5 per cent the EU has mandated. Instead, Ms Lagarde urged the EU to change its target to 1.5 per cent, a sign that she believes Brussels is demanding too much austerity of Athens.

“Let there be no doubt that meeting this higher target would not only be very difficult to reach, but possibly counterproductive,” she wrote.

“We do not believe that it will be possible to reach a 3.5 per cent of GDP primary surplus by relying on hiking already high taxes levied on a narrow base, cutting excessively discretionary spending, and counting one-off measures as has been proposed in recent weeks.”

The “contingency measures” have been contemplated over the past month as a way to bridge the gap between the IMF’s 1.5 per cent target and the EU at 3.5 per cent. Such cuts would only go into effect if it became clear Athens was going to miss the 3.5 per cent goal.

But the IMF, backed by Germany, has insisted that any agreement on contingency measures include detailed cuts and reform measures — something Athens has said was impossible to get through the Greek parliament, a stance backed by the European Commission.

Ms Lagarde wrote that Athens’ counterproposal — a mechanism that would trigger across-the-board cuts — was unworkable, implying that discussions surrounding the contingency measures should be dropped.

“Unfortunately, the contingency mechanism that Greece is proposing does not include [specific economic] reforms,” she wrote. “Based on past performance, such ad hoc measures are not very credible, but they are also undesirable as they add to uncertainty and fail to resolve the underlying imbalances.”

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