Tvsangirai, who is in a unity government formed in February after a disputed election, said his Movement for Democratic Change (MDC) would disengage from the ruling Zanu-PF until "all outstanding issues are fulfilled".
"Until confidence has been restored, we can't continue to pretend that everything is well," Tsvangirai said, referring to a trial scheduled to begin on Monday against Roy Bennett, his nominee for the post of deputy agriculture minister.
"We understand the frustration of the opposition in the lack of progress. Everybody needs to continue to put pressure on Mr Mugabe to implement the agreement"
Ian Kelly, state department spokesman
Bennet has been charged with weapons violations and the charges are linked to long-discredited allegations that the MDC planned to overthrow Mugabe's government.
He had been sent back to prison but was freed on Friday pending Monday's trial.
Officials from the MDC said the decision to return him to prison was a serious attack on the credibility of the inclusive government.
The MDC treasurer, Bennett was originally arrested on February 13 - the same day the unity government was sworn in.
He was then freed on bail in March 2009.
Haru Mutasa, Al Jazeera's correspondent in Harare, Zimbabwe's capital, reported:
"Tsvangirai will not participate in cabinet meetings. This means that Zanu-PF and President Robert Mubage can not effectively push forward any policies, policies to do with land and the economy.
"The bad side for Zimbabwe is that the country is at a standstill, which is what analysts say the prime minister is trying to achieve - to make this country ungovernable so that maybe the president will be forced to meet him and address these outstanding issues."
Ian Khama, the president of neighbouring Botswana and a rare critic of Mugabe in southern Africa, warned that the pact was in danger of collapsing if the parties failed to agree on key issues.
"It is limping along and there is a real danger that the whole thing could collapse," he told the AFP news agency in Gaborone.
Mugabe and Tsvangirai formed the unity government in February nearly a year after disputed polls and major international sanctions plunged Zimbabwe into deeper economic and political chaos.
Bennett, a white former coffee farmer whose land was expropriated under Mugabe's land reforms, was arrested on his return from South Africa where he had fled after being implicated in an alleged plot to kill the president.