Austrian Finance Minister Maria Fekter said the 17-nation currency area would combine two rescue funds for a year to make more money available in case of emergency.
She put the total figure at some €800 billion, but that appeared to include money already spent to conjure up a more impressive headline number for investors.
Ministers would allow the temporary €440 billion European Financial Stability Facility (EFSF) to continue to run for a year in parallel with the permanent €500 billion European Stability Mechanism (ESM), which starts work in July.
However, EU paymaster Germany favoured a smaller increase, and those figures included some €192 billion already paid or committed to Greece, Ireland and Portugal, plus money that could only be raised if eurozone states were to pay in more capital faster than planned to the ESM.
Fekter said the residual €240 billion from the EFSF would be used as a reserve buffer while the two funds run in parallel and the ESM's capital is being built up.
A statement by the Eurogroup, issued after the meeting, said: "The current overall ceiling for ESM/EFSF lending, as defined in the ESM Treaty, will be raised to €700 billion." However, it added that: "As of mid-2013, the maximum lending volume of ESM will be €500 billion," its initial level.
"The agreement essentially means that the eurozone has rejected an effective increase in the ESM," said Eurointelligence, an economic commentary and analysis website run by Financial Times associate editor Wolfgang Münchau.
Spanish banks focus attention
Bond market players questioned whether the temporary increase would provide sufficient money to help Spain, the eurozone's number four economy, if it needs a bailout to overcome a banking crisis due to the collapse of a real estate bubble.
"At the end of the day the key question is whether this new firepower is enough," said Steve Barrow, head of G10 strategy at Standard Bank in London. "Clearly if things turn down again, and especially if more bailouts are needed, the tricky issue of underfunding the ESM/EFSF relative to the potential bailout need is bound to resurface."
Commerzbank analyst Christoph Weil said the proposed boost, combined with extra assistance from the International Monetary Fund, would probably be big enough to "offer shelter to Spain and Italy if necessary".
"Nonetheless, there is reason to fear that investors will remain sceptical and continue to demand high risk premiums for peripheral bonds," he wrote in a note.
The residual EFSF funds - about €240 billion - could only be called on if the ESM, which will initially have €200 billion available to lend, ran out of money to finance a new bailout during that period.
More money from the IMF?
A higher eurozone bailout capacity is a pre-condition for most G20 countries to contribute more money to the International Monetary Fund (IMF).
And euro zone diplomats are confident that the proposed temporary boost will be sufficient to unlock an additional €500 billion in IMF contingency funds.
But Germany, where public opinion is hostile to bailouts, has been against raising the eurozone's funds, noting that markets have calmed down from the peak of the debt crisis.
Yet market concern about Spain, which badly missed its budget deficit target in 2011 and negotiated with the eurozone a softer target for 2012, have put the bailout capability discussion back on the table.
