The United Nations refugee agency says talks to persuade up to 3,000 Sudanese protesters to end a sit-in outside its offices in Cairo have failed.
Several people have died and babies have been born in the camp
The protesters, who have camped outside the UNHCR building in Egypt's capital for almost three months, are demanding that the UN resettle them elsewhere.
Some want to move to the West, while others just hope for better conditions.
A UN official said the talks had broken down because it did not have the power to guarantee their demands were met.
The long-running demonstration began after the UNCHR stopped aid to those who had applied and failed to get refugee status.
Several protesters have since died and a number of babies have been born at the makeshift camp, where many sleep in the open.
The UN agency has been meeting leaders of the sit-in for talks but an agreement to satisfy all the protesters has not been reached.
Under its current deal, the agency offers interviews on refugee status and one-off financial assistance for housing.
The protesters say they face discrimination and poverty in Egypt
UNHCR spokeswoman Amina al-Korey told AP the agency had been trying to meet protesters' demands, but could not guarantee resettlement.
"It is the recipient countries who decide who to take," she said.
The UNHCR says it has to prioritise help for people genuinely at risk of persecution and cannot solve issues of discrimination and deprivation in Egypt, where unemployment is high.
It believes most of the demonstrators are economic migrants rather than those fleeing persecution, and so do not qualify as refugees.
But many of the protesters argue it is not yet safe to return to Sudan, despite the signing of a peace accord in January ending the 21-year civil war.
Under international law, failed asylum seekers could face deportation by the Egyptian authorities.
A leading US refugee expert at the American University in Cairo told the Associated Press news agency that a "terrible stalemate" had been created.
"The bottom line is that the UNHCR isn't going to resettle the refugees, who by continuing to protest are only creating more problems for themselves," said Professor Barbara Harrell-Bond.