Portugal's caretaker Prime Minister Jose Socrates has said that he has asked the European Union for financial assistance.
Mr Socrates said the country was "at too much risk that it shouldn't be exposed to".
The government has long resisted asking for aid but last week admitted that it had missed its 2010 budget deficit target.
Portugal follows Greece and the Irish Republic in seeking a bail-out.
"I always said asking for foreign aid would be the final way to go but we have reached the moment," Mr Socrates said.
"Above all, it's in the national interest."
European Commission President Jose Manuel Barroso said in a statement that Portugal's request would be processed "in the swiftest possible manner, according to the rules applicable".
He also reaffirmed his "confidence in Portugal's capacity to overcome the present difficulties, with the solidarity of its partners".
Mr Socrates did not say how much aid Portugal would ask for. Negotiations will now be underway and the BBC's business editor Robert Peston said rescue loans could amount to as much as 80bn euros ($115bn; £70bn).
Mr Socrates was speaking after Finance Minister Fernando Teixeira dos Santos said it was necessary to resort to financial aid from the EU.
Earlier, the government raised about 1bn euros after tapping the financial markets in order to repay loans, but will have to pay a higher interest rate to lenders.
Portugal's cost of borrowing has risen sharply since the minority Socialist government resigned last month after its proposed tougher austerity measures were defeated in parliament.
Since then several rating agencies have downgraded the country's debt.
An informal meeting of European finance ministers had already been scheduled for Thursday in Budapest. Portugal was not originally on the agenda but is expected to be discussed.
The UK Treasury Minister Mark Hoban will attend. A source at the Treasury said that the bilateral loan the UK offered to the Irish Republic was "very much a special case" and a similar offer is "not on the table" for Portugal.
Jan Randolph, head of sovereign risk at IHS Global Insight, told the BBC that Portugal might organise "some sort of bridging loan" in the short term.
But he added: "The real big loan over several years will require a medium-term plan and I don't think that can be agreed until the new government comes into place."
Elections are likely to take place in a few months' time.