"We are starting from scratch now," Nicolas Maduro, Venezuela's foreign minister, said on Friday.
Latin American diplomats had hoped that high-level talks hosted by Ecuador on Thursday between Maduro and his Guatemalan counterpart, Gert Rosenthal, could break the impasse.
The 41 votes have so far failed to produce a winner, but both countries have refused to withdraw.
Guatemala has led Venezuela in all but one of the votes, where they tied, but it has been clear since the early ballots that neither can muster the majority two-thirds support in the 192-nation UN General Assembly that is required to win the seat.
The US backs Guatemala, while Hugo Chavez, the Venezuelan president, wants the seat so he can frustrate US policy in the UN.
Maduro said that between Monday and Tuesday several countries were contacted as possible alternatives as agreed by the two countries.
But he said that during Thursday's meeting Guatemala said "they were cancelling all the talks and they did not recognise the agreements made on Monday and Tuesday."
"The foreign ministry of Guatemala is changing its mind because they are following the signal sent by the US administration," he said.
"Venezuela's strategy has always been to make this about the United States."
Richard Grenell, US mission to the UN
Richard Grenell, a spokesman for the US mission to the UN, rejected Maduro's claims.
"Venezuela's strategy has always been to make this about the United States. This issue is about who would serve best on the security council. Clearly, it is our opinion that Guatemala is the best candidate," he said.
"We still believe we have the possibility of getting enough votes to prevail," Guatemala’s Rosenthal said.
"Our position is different from theirs - they don't have any chances."
A number of countries had been mentioned as possible compromise candidates including Bolivia, Costa Rica, Uruguay, Chile, Brazil and most recently the Dominican Republic. Brazil and Costa Rica have already said they are not interested.