German Chancellor Angela Merkel has arrived amid heavy security for her first Greek visit since the eurozone crisis erupted nearly three years ago.
Some 7,000 police officers are on duty, public gatherings are banned in certain areas of the city and protesters have been warned to “protect the peace”.
The visit comes as Greece bids to pass new cuts of 13bn euros (£10.5bn; $17bn) to qualify for more bailout cash.
Analysts say Mrs Merkel is regarded by many Greeks as the author of austerity.
While Germany has contributed the most money in the bailing out of Greece, BBC Europe editor Gavin Hewitt says its chancellor is held responsible for demanding that Greece make swingeing cuts in exchange for the financing it has received.
Ahead of the visit, European Central Bank president Mario Draghi told the European Parliament that Greece had made progress, although “further work” was needed.
Mr Draghi told the parliament’s Economic and Monetary Affairs Committee on Tuesday: “It’s quite clear that the progress at the level of undertaking the necessary policy reform has been perceptible and significant and it’s also clear that more needs to be done.”
There has been growing unrest in Greece at the planned new cutbacks.
‘Protect the peace’
Mrs Merkel arrived in Athens on schedule at 13:30 local time (10:30 GMT) to be met by Prime Minister Antonis Samaras.
Police have banned protests on Tuesday in much of central Athens, and within a 100m radius of the route Mrs Merkel’s motorcade will travel, although two planned protests elsewhere in the city are going ahead, with hundreds now gathering in Syntagma Square.
Mrs Merkel will be in Athens for about six hours, and will hold talks with Mr Samaras and President Karolos Papoulias.
The capital is said to be carrying out its biggest security operation in a decade.
Left-wing newspapers on Tuesday encouraged widespread, although non-violent, protests.
A spokesperson for the leftist Syriza party, Yiannis Bournos, told the BBC’s Newsday it was expecting huge demonstrations.
“People are frustrated and enraged because they clearly understand that Mrs Merkel’s visit is just a theatre play for the political support of a collapsing coalition,” Mr Bournos said.
On Monday, public order minister Nikos Dendias appealed to protesters to “protect the peace, and above all our country’s prospects and our international image”, Reuters news agency reported.
The Greek government says the visit is a “positive step”.
Government spokesman Simos Kedikoglou told Greek television: “We believe this is a message of faith in the course of the Greek government, the Greek economy.”
There was an demonstration of about 2,000 people late on Monday around the main square in the capital.
One union leader, Nikos Papageorgiou, said at the rally: “These measures are hitting every Greek family – hurting our children.
“People should not be afraid to protest because of the police measures. No-one can deny us the right to ask for a better life.”
However, other Athens citizens were more upbeat about the visit.
Constantinos Siathas told Associated Press: “I think most people, at least those who think and don’t act based on feelings or utopian ideas, are pleased and are expecting a lot from Mrs Merkel’s visit.”
The trip is a gamble, our Europe editor says. If there is chaos on the streets, it will only underline for the German public that Greece is a lost cause.
But he says that the visit – her first to Greece in five years – is sending a symbolic message that she wants Greece to stay in the eurozone.
Speaking on Monday, Jean-Claude Juncker, chairman of the Eurogroup finance ministers of the eurozone, raised the pressure on Greece, calling on the government to demonstrate it could implement planned reforms “by 18 October at the latest” to qualify for the next bailout instalment of 31.5bn euros.
He was speaking as the eurozone’s new permanent fund to bail out struggling economies and banks was formally launched at the finance ministers’ meeting.
Meanwhile, the International Monetary Fund said on Monday that the global economic recovery was weakening, with government policies having failed to restore confidence.
It added that the risk of further deterioration in the economic outlook was “considerable” and had increased.