Under the deal, reached between Greek Prime Minister Alexis Tsipras and Archbishop Hieronymos of the Church of Greece, the state will in the future transfer an annual state subsidy to a special church fund for the payment of priests' salaries.
The agreement also foresees a settlement to a decades-old dispute over property between the Greek state and the Church, which is one of the country's largest real estate owners.
Greece's creditors have long urged the government to sell assets and reduce the number of public sector employees. Under the current system, priests' salaries are paid directly from the state budget as are those of all civil servants. The annual cost of the priests on the government's payroll is estimated at about 200 million euros.
Greek PM last week called for clarity in church-state relations, saying that it was time for Greece to clearly outline the religious neutrality of the state within the constitution. Addressing the general assembly of his ruling left-wing SYRIZA party, Tsipras unveiled his plans to reform the constitution to determine the relationship between the Orthodox Church and the Greek state.
Tuesday's preliminary agreement coincides with parliamentary discussions on a revision of Greece's constitution. Tsipras said he had reassured the Archbishop that any constitutional changes would protect the autonomy of the Church.
The Article 3 of the Greek constitution defines the Eastern Orthodox Church of Christ as the "prevailing religion in Greece," in addition to defining its relations with the Fener Greek Orthodox Patriarchate in Istanbul, the highest authority in the Orthodox world. Although the following articles express religious freedom for all faiths, minority groups, especially the Muslim-Turkish minority in western Thrace, often express discrimination.