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.
Suggested For You
Get top stories and blog posts emailed to me each day. Newsletters may offer personalized content or advertisements. Learn more