BERLIN (AFP) - German Chancellor Angela Merkel on Wednesday welcomed as a "starting point for discussions" reform pledges made by Greece in return for a four-month extension to its lifeline bailout programme.

"This is good news considering what was being said only weeks ago," Merkel said, adding however that "much work lies ahead" in talks between Athens and its international creditors.

"I'm under no illusion. The way ahead remains challenging," said Merkel.