If parties fail to form a new coalition within 30 days, elections can be called by Viktor Yushchenko, the president.
Our Ukraine, the party lead by Yushchenko, announced earlier in the month that it was pulling out of the pro-West coalition it had formed with with Yulia Tymoshenko, the prime minister, and her Tymoshenko Bloc.
The move came after Tymoshenko had offered support to the opposition which is seeking to reduce the powers of the president.
The parties had failed to settle their differences during a 10-day reconciliation period and Tymoshenko will now have to resign but is likely to continue as prime minister until the formation of a new cabinet.
Tymoshenko and Yushchenko were the icons of the 2004 Orange Revolution.
Analysts consider both leaders as Western-leaning, despite persistent and sharp disagreements on domestic political issues and recent accusations by Yushchenko that Tymoshenko was siding with Moscow - allegations she has denied.