Greece's referendum on austerity proposals is effectively an "in/out" vote on whether the country should stay in the euro, British prime minister David Cameron has said.

Mr Cameron told BBC Radio 4’s Today programme the decision is for the Greek people to make, but the UK Government is preparing for “every eventuality”.

In a meeting later on Monday he will ensure that the "final touches" have been put to government plans to assist British holidaymakers and ex-pats in Greece, and to protect wider UK interests, in the case of a default by Athens.

The prime minister said Britain's interest is in a stable and secure eurozone and a European Union with the flexibility to deal with the issues facing different countries – including the concerns which prompted him to call a referendum in the UK on the country's EU membership.

Greece is teetering on the brink of financial collapse as banks and the stock exchange remain closed after crucial routes to financial support hit a dead end.

European Central Bank (ECB) emergency finance lines were kept open but further credit was refused just a day after bailout extension pleas were rejected by the eurozone.

Asked whether the referendum called by Greek prime minister Alexis Tsipras amounted to an "in/out" vote on remaining in the eurozone, Mr Cameron told Today: "I think that's what it will come down to. If the Greek people vote Yes, they are voting for the sort of deal that was put forward by the institutions and therefore voting to have that as an option.

“If they vote No, I find it hard to see how that is consistent with staying in the euro, because I think there would be a very significant default and a very significant problem. But it is for the Greek people to decide.”