UPDATE 1-EU's Rehn urges euro leaders to agree on Greece

* Rehn calls for political agreement on Greece

* Commission prefers European-led solution

* Commission backs euro zone meeting before EU summit

(Adds quotes)

BRUSSELS, March 24 (Reuters) - The European Union's monetary affairs chief urged countries that use the euro on Wednesday to reach a political agreement on a way to help Greece if Athens requests financial help to ease its debt problems.

EU leaders hold a summit in Brussels on Thursday and Friday but Greece is not formally on the agenda because of opposition from German Chancellor Angela Merkel.

EU Economic and Monetary Affairs Commissioner Olli Rehn said he supported calls for leaders of the 16-country euro zone to meet before the summit to discuss the Greek crisis.

"The (European) Commission encourages euro zone member states to take a political decision on a mechanism to ensure financial stability in the euro area as a whole," Rehn told a news conference.

He called for "a mechanism that could be swiftly activated in the case of need, in conformity with the (EU) treaty and its bailout clause and without any automaticity built in."

Greece wants the euro zone to declare its readiness to lend to money. Athens believes this would reduce its borrowing costs on the market without it having to use the money.

But Merkel faces a regional election in May and the German public is hostile to helping Greece financially after it lived beyond its means for years and cheated on its statistics. Berlin has signalled Greece may have to turn to the IMF.

Rehn said the Commission, the EU executive, would prefer a euro zone solution.

"The Commission's view is that we prefer a euro area facility for a European problem and there needs to be a European lead and policy conditionality decided by the euro area member states," he said.

"I call on euro area member states to indeed seek such a agreement this week to show the euro area is able to manage such a serious situation as the one we are currently facing."

He said the Commission was ready to put in place a "framework for coordinated and conditional assistance".

(Reporting by Jan Strupczewski, editing by Timothy Heritage)