Lagarde called for the fund to be made more flexible, while Greece's finance minister said letting his country buy back government bonds at a discount on the market was worth considering.
Those funds could, in theory, be provided by European Financial Stability Facility (EFSF), but some northern euro zone states, including EU powerhouse Germany, oppose such a move.
Euro zone leaders are discussing ways to strengthen the fund to show it has enough firepower to support states struggling with their borrowings, hoping this will ease the debt crisis.
"We are working on making the EFSF more efficient, more flexible, and if it needs to be bigger for that matter, so be it," Lagarde told a news conference at the annual World Economic Forum in Davos, Switzerland.
U.S. Treasury Secretary Tim Geithner joined a bevy of European and international executives in voicing confidence that the European Union was on the road to overcoming the crisis.
Lagarde said using the rescue fund to buy sovereign bonds was an idea worth examining.
"Buying bonds is one option," she told Reuters Insider television. "We should look at it. We should weigh the pros and cons and decide what is most efficient."
The fund has a headline value of 440 billion euros but an effective lending capacity estimated at just 250 billion euros because of the need to secure a triple-A credit rating.
The worry is that the fund could be wiped out if a larger European economy such as Spain needed rescuing. If that happened the fallout might not remain contained within Europe.
The challenge is to boost it without raising the headline sum, which would be difficult to sell politically to Germany's parliament and public in particular.
GREEK BOND BUY-BACK?
Finance Minister George Papaconstantinou said Greece could return to the debt market by the end of this year and reiterated that Athens would not restructure its debt to private creditors.
Greece became the first euro zone country to receive an EU/IMF bailout last May, receiving 110 billion euros in loans after it was shut out of capital markets due to massive debts.
Asked about buying back Greece's bonds below par, Papaconstantinou said: "To do that you need money and so it is one of the ideas that is being discussed, not officially ... It's an idea that that deserves some discussion, like others." For the latest updates PRESS CTR + D or visit Stock Market news Today
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