"I am appealing to the public not to panic. The talks have not failed."
Jakaya Kikwete, Tanzania's president and chairman of the African Union, arrived in Nairobi on Wednesday to bolster international efforts for a deal.
Kikwete is scheduled to meet Kibaki and Odinga during his visit.
But sources close to the talks have suggested Annan is ready to leave Kenya if there is no progress soon.
Najib Balala, a member of Odinga's inner circle, blamed the government for the breakdown. He told Al Jazeera Kibaki's negotiators were "changing the goal posts every now and then".
"This is a dangerous move - [they are] not serious in the talks or mediation and do not believe in the mediation," he said.
But Alfred Mutua, a spokesman for the government, told Al Jazeera it was the opposition that was acting unreasonably.
"They are talking about the government not giving in. This is a government that has actually agreed to offer positions in its government [to the opposition] ... the other side has not agreed to anything."
He said Odinga was calling to be made equal in rank to Kibaki, which he said was "unacceptable".
"We can't have two forces running the country at the same time - that is anarchy," he told Al Jazeera.
"They [the opposition] have also threatened to use violence as a way to get into government and we are saying why is the international community agreeing to have people who are ready to kill other people so as to get into power? Whereas we want to promote democracy," he said.
Condoleezza Rice, the US secretary of state, criticised Kenyan leaders for failing to end their political stand-off and said Washington would take "necessary steps" if a solution was not found.
Rice, who is on a trip to China, said that while there had been some progress, "I am disappointed by the failure of leadership necessary to resolve all the remaining issues".
"I want to emphasise that the future of our relationship with both sides and their legitimacy hinges on their co-operation to achieve this political solution," she said.
The country's contentious presidential election on December 27 sparked widespread fighting as both Odinga and incumbent Kibaki claimed victory.
The country remains on edge with fears that fresh bouts of tribal fighting could break out.
Violence has also forced at least 600,000 people from their homes, mainly in the capital's slums and western region, regarded as the country's breadbasket.
Police said eight houses were burning in a western village in an ethnically motivated attack over the weekend.
A power-sharing deal seemed imminent last week when the government announced both sides had agreed on the establishment of the post of a prime minister and two deputies.
But the opposition is now threatening to launch new demonstrations if Kibaki fails to call parliament on Wednesday to enact constitutional amendments.
Past protests have led to violence as police forced back crowds.
Odinga's Orange Democratic Movement (ODM) insists the opposition leader be given a powerful prime minister post, while the government has offered him a non-executive office.
Koigi Wamwere, a former government minister, said that if Kibaki is agreeing to share power, than the ODM "should have some of those powers".
Speaking to Al Jazeera, he said: "But, once we have set up two centres of power in the same government, once we have set up two governments in one, then a lot of problems will follow.
"Remember, grand coalitions have worked best in countries that are ethnically and racially homogenous. Ours is a multi-ethnic society where ethnic divisions run deep."
The crisis, which has badly affected the country's economy, has tapped into simmering resentment over land, poverty and the dominance of the Kikuyu - Kibaki's tribe - in Kenyan politics and business since independence from Britain.