But after a meeting on Tuesday, the two could not find a common ground on how to allocate cabinet portfolios.

'Poles apart'

Nelson Chamisa, a spokesman for Tsvangirai's main opposition Movement for Democratic Change (MDC) party, said Mugabe and his Zanu-PF party wanted the key posts for finance, defence, foreign affairs and home affairs.

"It would appear that they do not understand power-sharing," Nelson Chamisa told The Associated Press, adding that Tsvangirai had appealed to African leaders to intervene.

The higher daily withdrawal limit led to massive queues outside banks in Harare [EPA]
"At the end of the meeting it emerged we are still poles apart, with Zanu-PF insisting on taking all the key ministries, literally rendering the [opposition] peripheral in government, in fact a situation where we would be in, but out of government."

But Mugabe, who just returned from a United Nations meeting in New York, denied that the negotiations were deadlocked, and promised a coalition government would be named this week.

The political turmoil has persisted as the country's economic crisis continues to rage.

In the capital, Harare, on Tuesday, traffic was disrupted as tens of thousands of Zimbabweans formed massive queues outside banks a day after the authorities raised the daily withdrawal limit from 1,000 Zimbabwe dollars – barely enough to buy a newspaper – to 20,000 Zimbabwe dollars ($35).

Zimbabwe's inflation is officially 11 million per cent, but believed to be much higher.