By Nektaria Stamouli 

Officials were battling it out for the minds of Greek voters on Thursday ahead of a critical vote on its creditors' demands that could decide whether the country leaves the euro or buckles down for further difficult negotiations.

The referendum called for Sunday is splitting voters and spreading dissent inside the Greek government as the country faces a potentially devastating bankruptcy. Eurozone finance ministers say there will be no further talks until after the vote--and even if Greeks vote "yes," that could be long and painful.

Complicating the picture, the International Monetary Fund warned in a review that Greece needs a comprehensive debt restructuring by the eurozone and additional bailout cash totaling above EUR60 billion through 2018 to return the country back to health--making clear the economic situation is worse than many voters are aware.

Crucially, a shorter version of the debt review, leaving out some of the IMF's bleaker predictions, is one of the two documents that Greeks are voting on in Sunday's referendum

The IMF report is also a sign to the Greeks that they won't get easier terms and to the Europeans that there are more political battles ahead. The IMF warns that easing the budget cuts and policy overhauls demanded by creditors even further would require the eurozone to write off around EUR50 billion of the loans they have already given to Athens. That's something eurozone politicians have ruled out.

Greek Prime Minister Alexis Tsipras has insisted that voter rejection of creditor demands would give him more leverage in negotiations and that the standoff could be quickly resolved.

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

But a German government official warned Greece would face long and hard negotiations over a fresh bailout even if voters rejected their government's tough line.

Negotiators are unlikely to be able to put Greece under a new financial safety net by July 20, when it must repay more than EUR3 billion in bonds held by the European Central Bank or face a second multi-billion default on its debt within 20 days. Greece became the first developed country to default on the IMF after it missed a $1.73 billion rescue-program payment the same day.

"We have to dispel this view that there can be an agreement next Wednesday," the government official said. "Even with the best will in the world, it will be a long and difficult process."

Berlin argues that Greece's default to the IMF and the rapid deterioration of the its economy and its public finances have shifted the basis for negotiations, making an agreement unlikely until well into the summer, if it can be reached at all.

One complication is the economic and fiscal impact on Greece of the five-month standoff, built-up domestic arrears and its closure of banks this week in the face of a surge of withdrawals

The collapse of trust between Greek negotiators and its creditors--mainly other eurozone members, the IMF, and the European Central Bank--in the past weeks will complicate matters further.

Gunther Kirchbaum, a lawmaker for German Chancellor Angela Merkel's Christian Democratic Union and head of parliament's European Union Affairs Committee, went further on Thursday, saying Greece was not even eligible for a fresh bailout, which Athens requested on Tuesday.

In order to qualify for aid under the rules of eurozone's bailout fund for states, Greece would need to show that its debt is sustainable and that it only faces a liquidity crunch. In addition, failure to secure such aid would have to pose a danger for the financial stability of the entire eurozone.

Mr. Kirchbaum said Greece satisfied none of these conditions since it had already defaulted to the IMF and given the fact that most economists expected the ECB's bond-buying program to insulate other eurozone members from the fallout of further defaults.

While several lawmakers said they shared Mr. Kirchbaum's views, others called his argument premature, saying they expected protracted negotiations on a new bailout to start next week, especially if Greek voters backed the creditors.

Under the German law that governs the country's participation in European bailouts, the government needs parliamentary approval both to start and conclude negotiations over a bailout, giving German lawmakers a double veto on any rescue deal.

In Greece, President Prokopis Pavlopoulos argued that the country's only option is Europe and the eurozone. "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 EUR245 billion bailout that expired on Tuesday. Two former Greek prime ministers, Costas Karamanlis and Costas Simitis --who oversaw the country's entry into the common currency--also threw their support behind the vote.

And in a sign of the bubbling dissent in the ruling coalition, five lawmakers in Syriza's junior coalition partner, Independent Greeks, distanced themselves from the government position Thursday, with some saying they intend to vote "yes" in the referendum, while others called on the government to cancel it.

Still, Greek Finance Minister Yanis Varoufakis remained optimistic that his country's voters would follow the government's recommendation. "We are going to win on Sunday" he said Thursday, speaking on Bloomberg TV.

"I am quite confident that the Greek people have had enough of extending and pretending."

Archie van Riemsdijk in Amsterdam contributed to this article.

Write to Nektaria Stamouli at nektaria.stamouli@wsj.com, Bertrand Benoit at bertrand.benoit@wsj.com and Andrea Thomas at andrea.thomas@wsj.com