Greek PM Lucas Papademos has failed to secure the support of his coalition for a raft of new austerity measures, after more than seven hours of talks.
He met officials from three parties to try to secure a deal leading to a fresh bailout package.
The main stumbling block was proposed pension cuts, reports said.
Immediately after the talks ended, Mr Papademos held a meeting with officials from the "troika" of bailout creditors which broke up after several hours.
A statement issued by the prime minister's office said the aim of the meeting with the troika - representatives from the European Union, the European Central Bank and the International Monetary Fund - was to "conclude the agreement" before Thursday's meeting of eurozone finance ministers.
Greek Finance Minister Evangelos Venizelos is travelling to Brussels to explain the sticking points of the deal to the Eurogroup.
"I leave for Brussels with hope that the Eurogroup will take a positive decision concerning the new aid plan," Mr Venizelos said prior to his departure from Athens.
"There was broad agreement on all the program issues with the exception of one, which requires further elaboration and discussion with the troika," the prime minister's office said.
'Serious reservations'
The main problem appears to be pension cuts worth 600m euros reportedly proposed in a draft text agreed by the troika and the prime minister. The document is also said to include a 20% minimum wage reduction and the sacking of 15,000 public sector workers.
The details were put to the leaders of Pasok, New Democracy and the far-right Laos party on Wednesday morning.
The government was said to be looking for 300m euros to be cut from supplementary and basic pensions while the creditors are reported to have allowed a further 15 days for the rest of the money to be found in savings elsewhere.
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Greek deadlines
This week: Eurozone finance ministers to hold a meeting or conference call to approve the latest bailout, as soon as Greek politicians agree to conditions
15 February: The latest a deal can be finalised in order to allow enough time for the Greek debt exchange, according to the Commission
20 March: Greece must have received its next tranche of bailout cash to meet a 14bn euro debt payment
April: Greek elections expected
Gavin Hewitt: Europe waits on Athens
According to Laos leader George Karatzaferis, the bulk of Wednesday's late night meeting was spent discussing the issue of supplementary pensions.
Mr Papademos's office said Mr Karatzaferis had expressed "serious reservations" during the meeting.
As he left, Mr Karatzaferis told reporters: "I made my positions clear from the beginning... I wanted to support Mr Samaras (New Democracy leader) on that issue (pensions)."
Antonis Samaras said he had felt obliged to bargain hard.
"We want to ease the people's suffering,'' he said.
However, the BBC's Mark Lowen, in Athens, says the package of cuts and reforms would go down very badly with an austerity weary Greek nation.
According to unconfirmed reports in the Greek media, the measures were aimed at trimming 3.2bn euros (£2.7bn; $4.2bn):
Minimum wage to be cut by 22% from 751 euros per month to 600 euros.
Supplementary pensions to be reduced by 15% but basic pensions also likely to be cut
15,000 public sector jobs to go by end of 2012
But holiday bonuses, known as 13th and 14th month salaries, expected to be saved
As part of Greece's new 130bn euro ($170bn; £110bn) bailout deal - Greece's second international bailout - Mr Papademos and Finance Minister Evangelos Venizelos have also been engaged in a separate strand of negotiations with private creditors over a write-off of up to 70% of the value of the money owed by the Greek government.
Three officials from the the International Institute of Finance (IIF), which is negotiating on behalf of the private creditors, completed talks on Tuesday night and returned to Paris.
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