BRUSSELS—The Greek government’s latest plan for breaking an impasse on desperately needed bailout aid makes a potentially major concession, three officials familiar with it said Monday, though eurozone leaders warned they received the proposal late and an immediate breakthrough was unlikely.

The proposals, formally submitted to creditors Monday morning, foresee new pension savings and revenues worth 0.4% of gross domestic product for this year and 1% starting next year, the officials said. That would bring the left-wing government in Athens close to the target demanded by its creditors.

If the government’s calculations are confirmed by Greece’s creditors—the International Monetary Fund, the European Central Bank and eurozone governments—it could be a big step toward ending a four-month deadlock that has prompted warnings of a Greek exit from the eurozone.

Greek Prime Minister Alexis Tsipras has been deeply reluctant to make any further concessions on pensions, aware that it will be difficult to sell to his far-left Syriza party, which has been vocally defiant about the terms of the bailout.

“We have made progress over the last few days, but we are not yet there,” said Jean-Claude Juncker, the president of the European Commission, as he was receiving Mr. Tsipras ahead of an emergency summit of eurozone leaders.

Although some ministers and officials welcomed the new proposals, many warned that any deal was likely still a few days off. Many ministers hadn’t seen details of the new Greek plans and were still waiting for a thorough assessment from the three institutions. European Union leaders are already scheduled to meet again Thursday and Friday.

Pierre Moscovici, the EU’s economics commissioner, said there was still work to do on value added tax, which the creditors want Greece to increase, and on pension reform.

“My expectation is we’ll be meeting again on Thursday before (the summit),” said Irish Finance Minister Michael Noonan.

European stocks and bonds surged as investors sensed a glimmer of hope ahead of the meeting. The Stoxx Europe 600 was 1.7% higher near midday.

Mr. Tsipras appeared optimistic a deal could be sealed. “We are coming here today in order to achieve a financially viable solution,” he said. “Our goal is to leave behind us the excessive primary surpluses, save pensions and salaries, avoid big rises in electricity bills, to restore regularity in the labor market, to tackle tax evasion and move ahead with fair reforms.”

The eurozone portion of Greece’s €245 billion rescue program runs out at the end of the month. Without a new aid transfer before then—and an extension of the five-year old aid plan—the government is set to default on a €1.54 billion payment to the IMF on June 30 and may struggle paying salaries and other government obligations. Further large payments to the IMF and the ECB loom later this summer.

Pensions and value-added taxes, each of which the creditors insisted needed to produce extra savings or revenues of 1% of GDP, have emerged as the most controversial issues in at times acrimonious negotiations.

Greek officials said that much of the pension target would be achieved by increasing contributions from employers. On top of that, an extra payment to the poorest pensioners, known as EKAS, would be phased out between 2018 and 2020, the officials said.

Also Monday, the ECB upped the emergency lending provided to Greek lenders to offset a daily deposit outflows, a Greek bank official said.

It is the third time in less than a week that the ECB has increased the limit on the emergency liquidity assistance program, or ELA, where the Greek central bank lends money to financial institutions.

The bank official didn’t clarify how much more money Greek banks will have access to.

“The ECB’s board of directors will meet again by teleconference whenever it is needed,” he added.