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EU leaders gather in Brussels on Thursday, after Portugal's parliament rejected an austerity budget, prompting the resignation of PM Jose Socrates.
The vote means an international bail-out, similar to those accepted by Greece and the Irish Republic last year, is now far more likely.
Mr Socrates said opposition parties had "removed from the government the conditions to govern".
The EU summit was aimed at stopping the eurozone debt crisis from spreading.
Although the situation in Libya and recent events in Tunisia and Egypt are high on the agenda, the summit has been billed as the moment the 27 EU member states adopt a "comprehensive package" on stabilising the eurozone.
As part of the deal, the lending capacity of the European Financial Stability Facility (EFSF) would be raised from 250bn euros (£218bn; $354bn) to 440bn euros. The EFSF is due to be replaced by a permanent European Stability Mechanism in 2013.
The German Chancellor described the Portuguese vote as "regrettable"
Pressure on Portugal's economy intensified on Thursday as the interest rate on the country's 10-year bonds climbed to a new high of 7.91%.
Portugal faces bond repayments of 4.3bn euros on 15 April and, in a national address on Wednesday night, Mr Socrates warned that the political crisis would have "very serious consequences in terms of the confidence Portugal needs to enjoy with institutions and financial markets".
'Courageous'
In a speech to the German parliament (Bundestag), Chancellor Angela Merkel said it was "regrettable" that Portuguese MPs had rejected the government's proposed package of spending cuts and tax rises.
Praising Mr Socrates' efforts as "courageous", Mrs Merkel said: "What is needed is a consistent path of consolidation and reform. Yesterday showed how difficult this is."
British Chancellor George Osborne described the defeat as "concerning".
All five Portuguese opposition parties rejected the austerity measures - the government's fourth set of proposals in a year - arguing they went too far.
"Every opposition party rejected the measures proposed by the government to prevent that Portugal resort to external aid," Mr Socrates.
Although he resigned on Wednesday, Mr Socrates will travel to Brussels as caretaker prime minister. A snap election is now considered most likely, but the decision will be made by Portuguese President Anibal Cavaco Silva.
Lisbon has argued its situation is different from Greece and the Irish Republic - both of which have agreed to bail-outs from the European Union and International Monetary Fund.
It says that its deficit and debt are lower than those nations, that it has not suffered a bubble in property prices and that its banks are sound.
