ATHENS—Greeks took sides Thursday on a looming referendum on creditors' demands that could decide the country's future, as a top European official warned that Greece doesn't belong in the eurozone if it isn't willing to take up reforms.

The referendum called for Sunday is splitting voters and spreading dissent inside the government as the country faces a potentially devastating bankruptcy. Eurozone finance ministers say there will be no further talks until after the vote.

Moderate politicians both in and outside of Prime Minister Alexis Tsipras's Syriza party are afraid that a "no" vote will lead to an exit from the euro. Mr. Tsipras has insisted that voter rejection of creditor demands would give him more leverage in negotiations for desperately needed funded, a claim European leaders have denied.

"The day after the referendum we will be united in the country's efforts to overcome this economic crisis," Mr. Tsipras said during a visit to the defense ministry.

Greece's only option is Europe and the eurozone, Greek President Prokopis Pavlopoulos argued.

"The referendum serves democracy only if it is taking place under conditions that don't allow division," Mr. Pavlopoulos said during a meeting with the president of the National Bank. While in parliament, Mr. Pavlopoulos had supported the austerity measures Greece undertook in exchange for a €245 billion bailout that expired on Tuesday.

Greece became the first developed country to default on the International Monetary Fund after it missed a $1.73 billion rescue-program payment the same day.

Ordinary Greeks are feeling the pressure. A surge of deposit withdrawals forced the country close bank and to limit cash machine withdrawals to €60 ($66) a day.

On Wednesday, European officials dismissed a compromise bid from Athens as insufficient to revive negotiations, saying there would be no further bailout talks with Greece until after its Sunday referendum.

If Greeks vote "no," there will no longer be any basis for the other euro area countries to support Greece, Jeroen Dijsselbloem, the Dutch finance minister who has presided over talks with his eurozone counterparts, said.

That doesn't mean that a "no" vote entails Greece automatically leaving the monetary union, he said. But he stressed it would be an illusion for voters to believe they would be in a position to negotiate a better bailout package.

In a sign of the bubbling dissent in the ruling coalition, two lawmakers in Syriza's junior coalition partner, Independent Greeks, said Thursday they intend to vote "yes" in the referendum, while a third asked the government to withdraw the referendum. One of those who said he would vote "yes" was expelled from the parliamentary group and asked to give up his seat.

Government spokesman Gabriel Sakellaridis said negotiations with the country's international creditors will start again Monday if Greeks vote 'no.'

Archie van Riemsdijk in Amsterdam contributed to this article.

Write to Nektaria Stamouli at nektaria.stamouli@wsj.com

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