European leaders contend that a Greek vote against the lenders' plan would amount to Athens withdrawing from the 19-nation euro currency bloc, but Tsipras rejected that argument.
"A 'no' vote is a decisive step for a better agreement, which we will aim to sign straight after the referendum," the prime minister said in a televised speech to his countrymen. " 'No' does not mean a rupture with Europe."
Earlier, Tsipras told Greece's international creditors in a letter that Athens is prepared to accept most of Europe's terms for new bailout money. German Chancellor Angela Merkel rejected new negotiations, telling her country's parliament in Berlin, "We will wait for the referendum. There can be no negotiations on a new aid program before the referendum."
The Greek letter to creditors was shared with news outlets hours before a teleconference of eurozone finance ministers on Athens' request for $32.4 billion in new funding. After the meeting, however, the finance chiefs decided not to negotiate any more ahead of the Sunday vote.
US expresses concern
In Washington, President Barack Obama said Tuesday the Greek financial crisis is "an issue of substantial concern," but one that affects Europe more than the United States. Obama said the U.S. does not believe the ongoing financial turmoil will result in "a major shock" to the American economy, the world's largest.
U.S. Treasury Secretary Jack Lew, who spoke with several European finance ministers by telephone Tuesday, said afterward that it is in the best interests of all parties, and for the global economy, if Greece and its creditors continue to work toward a solution that puts Greece on a path toward reform and recovery within the eurozone.
The German leader, Europe's staunchest advocate for tough austerity measures in Greece, rejected the notion that the Greek financial turmoil would lead to the demise of the eurozone.
"The world is watching us," she said. "But the future of Europe is not at stake. The future of Europe would be at stake if we forgot who we are and what makes us strong — a community based on rules and responsibility."
Eurozone finance ministers had decided not to extend a bailout program for Greece on Tuesday, and the Greek government failed to make a $1.8 billion loan payment to the International Monetary Fund. That default marked the first time a developed country has failed to meet a payment deadline on an IMF loan.
The Fitch ratings agency Tuesday downgraded Greece's credit rating further into "junk" status, meaning it considers the country likely to default on private debt.