Greece has been thrown further into political panic after the centrist Democratic Left party said it would not join pro-bailout parties in forming a coalition.
The Democratic Left said that it could not join the emergency government, called for by the Greek president Karolos Papoulias, unless the far-left Syriza party also agreed to the deal.
But Syriza have ruled out forming any coalition if Greece continued to back the massive austerity cuts required by the EU and IMF.
The cuts have been demanded by the international organisations before a fresh round of bailout loans totalling around 240bn euros can be agreed. The package must be implemented in June if Greece is to avoid a likely default on existing loans.
But since the 5 May elections, which saw voters flock to anti-bailout parties, Greece has been left with no clear government.
Frantic deals and counter deals to try and form a coalition have been reported - and so far all have failed.
So far no major party has been able to form a stable executive, and efforts to bring the four major parties together in a national government have also failed to stop talk of new elections - meaning more delays before the bailout money can be sent.
Without a government in place the possibility remains that Greece could default on its debts and be forced to leave the eurozone.
In a poll held over the weekend more than 87% of Huffington Post UK readers said that Greece would eventually leave the euro.
Meanwhile EU finance ministers were meeting in Brussels on Monday to discuss the Greek situation, and the possibility that the country may eventually be forced to leave the single currency.
Shares in Greek banks fell dramatically on Monday morning when markets opened in Athens. Piraeus Bank shares lost 9.7% in value, followed by Alpha bank which fell more than 8%.
Banks elsewhere in Europe, including in London, fell on the news that EU ministers were discussing the possibility of a Greek exit from the eurozone.
Analysts and officials have also begun openly discussing the possibility of Greek leaving, with Luc Coene, governor of the Belgian central bank, speaking of an "amicable divorce" in an interview with the Financial Times.
According to the European Commission Greece's economy will contract by 4.7% in 2012, and is unlikely to grow in 2013.
Taiwanese people pray together during the Taiwan National Buddha's Birthday celebration in front of the Chiang Kai-shek Memorial Hall in Taipei, Taiwan, Sunday, May 13, 2012. Buddha's birthday is celebrated in East Asia on the eighth day of the fourth month in the Chinese lunar calendar, and statutory on the second Sunday, Mother's Day, of May in Taiwan. (AP Photo/Chiang Ying-ying)
An Indonesian helicopter carrying the bodies of victims of Wednesday's plane crash flies through Bogor, in West Java, Indonesia. Clearer weather finally allowed Indonesian helicopters to land Saturday and retrieve some remains of the 45 people aboard a Russian-made plane that crashed into the volcano during a demonstration flight. (AP Photo/Achmad Ibrahim)
Hawaian Coco Ho competes during the final of the Association of Surfing Professionals (ASP) Billabong Rio Pro women's surfing competition at Barra da Tijuca beach in Rio de Janeiro, Brazil, Sunday, May 13, 2012. (AP Photo/Silvia Izquierdo)
Occupy demonstrators dance near the Bank of England, in central London. Picture date: Saturday May 12, 2012. The protest by several hundred demonstrators in the City of London was part of a global day of action that saw thousands of people rallying in cities including Moscow, New York, Athens and Madrid. See PA story PROTEST City. Photo credit should read: Dominic Lipinski/PA Wire
The pack emerges from the fog during the eight stage of the Giro d'Italia, Tour of Italy cycling race, from Sulmona to Lago Laceno, Sunday, May 13, 2012. (AP Photo/Daniele Badolato)
Raindrops spatter the reflection of the Pittsburgh skyline reflected in water pooled atop a dugout at PNC Park before a scheduled baseball game between the Pittsburgh Pirates and the Houston Astros, Sunday, May 13, 2012. (AP Photo/Keith Srakocic)
British rider Lee Richardson during an accident while racing for PGE Marma Rzeszow against Sparta Betard Wroclaw in Wroclaw, Poland, Sunday, May 13, 2012. Speedway rider Lee Richardson has died following a crash in Poland, his British team have confirmed. ÂRichardson, 33, was competing for PGE Marma Rzeszow against Betard Sparta Wroclaw when he crashed into a safety fence.The Lakeside Hammers captain was taken to a hospital in Wroclaw but died from his injuries. (AP Photo/Piotr Walczak) POLAND OUT
Manchester City captain Vincent Kompany lifts the trophy following the Barclays Premier League match at the Etihad Stadium, Manchester. Picture date: Sunday May 13, 2012. See PA story SOCCER Man City. Photo credit should read: Peter Byrne/PA Wire.
The 75029 Green Knight passes under the Larpool Viaduct, near Whitby in North Yorkshire, on the final day of the popular North Yorkshire Moors Railway Spring Gala. Picture date: Sunday May 13, 2012. Green Knight was built in Swindon in 1956 and has recently returned to service after an extensive two year overhaul. Photo credit should read: Anna Gowthorpe/PA Wire