BERLIN German Chancellor Angela Merkel asked Greek President Karolos Papoulias what he thought of the idea of holding a referendum on Greek membership in the euro but did not actively push for it, Bild newspaper reported on Saturday.
A Greek government spokesman said Merkel raised the idea in a telephone call on Friday but Berlin swiftly denied that.
The incident reignited anti-Merkel sentiment in debt-laden Greece where many accuse the German leader of exacerbating the crisis by being slow to act and then demanding austerity measures that are too tough.
A Merkel spokeswoman said on Saturday there was "no truth to reports" the German leader urged Greece to hold a referendum but declined to give details of what had been discussed.
Paul Ronzheimer, a reporter with Germany's Bild newspaper, wrote on Saturday Merkel asked Papoulias about the idea of a possible referendum on the euro during the phone call.
The article was headlined "Bild at the negotiating table in Greece", appearing to imply the reporter was present during the conversation. Ronzheimer later told Reuters he was not in the room when Papoulias spoke with Merkel but had learned about the conversation from other sources.
"She wanted to talk to him about a possible referendum on the euro - the idea came up a few days ago from a meeting of European Union finance ministers," wrote Ronzheimer, who was accompanying European Parliament President Martin Schulz in Athens on Friday, in a report published on Saturday.
"Merkel wanted to know what Papoulias thought of the idea - he rejected it," the Bild journalist wrote.
The Bild reporter said he did meet Papoulias and spoke German with him.
German officials have said Merkel conveyed her hope for a functioning government in Greece after repeat elections on June 17. Germany is the largest single contributor to the Greek rescue efforts.
Greek government spokesman Dimitris Tsiodras said after the call that Merkel had specifically raised the idea of Greece holding a referendum on its euro zone membership next month.
"(Merkel) relayed to the president thoughts about holding a referendum in parallel with the elections on the question whether Greek citizens wish to remain in the euro zone," he said.
That has triggered fresh Greek criticism of Merkel who had already been caricatured in some Greek media wearing Nazi uniform. The latest controversy was splashed across the front pages of Greek newspapers.
The centre-right daily Eleftheros Typos ran the headline: "THE MERKEL BOMB: Unprecedented political intervention dynamites the climate".
But Greece's interim prime minister, Panagiotis Pikrammenos, tried to defuse the controversy on Saturday and said he considered the matter closed. "The issue was exhausted yesterday," Pikrammenos told reporters.
(Additional reporting by Renee Maltezou and Peter Graff in Athens Editing by Maria Golovnina)
(This story was corrected to fix paragraphs 1,5-6 to clarify that the Bild reporter was not a witness to phone call and remove reference to Papoulias speaking in German with Merkel)