Morgan Tsvangirai wants to have equal powers to Mr Mugabe
Zimbabwe's President Robert Mugabe has said the opposition MDC has until Thursday to agree a power-sharing deal, or he will form his own government.
"We feel frozen at the moment [without a government]," he told state media.
The MDC has rejected the ultimatum and says it will not be "bullied" into signing a deal.
Both Mr Mugabe and MDC leader Morgan Tsvangirai say they won elections earlier this year. The MDC says it was subjected to state-sponsored violence.
At talks mediated by South Africa, the two rivals agreed that Mr Tsvangirai would be named prime minister while Mr Mugabe remained president, but they cannot agree on how to share powers.
The MDC wants Mr Mugabe to become a ceremonial president, while the ruling Zanu-PF party insists he retain control of the security forces and the powers to appoint and dismiss ministers.
"If after tomorrow [Thursday], Tsvangirai does not want to sign, we will certainly put together a cabinet," the state-owned Herald newspaper quotes Mr Mugabe as saying on his return from Zambia on Wednesday.
"We are a government and we are government that is empowered by elections. We should form a cabinet. We would not allow a situation where we will not have a cabinet forever," he said.
MDC spokesman Nelson Chamisa told the BBC the opposition would not be "stampeded" into signing a bad agreement.
"It's actually better not to have a deal than to have a very bad deal, as the [MDC] president Mr Tsvangirai says.
"We will not be succumbing to ultimatums, arm-twisting tactics, intimidation and bullying that Zanu PF has been adopting."
Mr Mugabe last week opened parliament against MDC wishes
BBC Southern Africa correspondent Jonah Fisher says that if a cabinet is formed, it would almost certainly mean the end of the talks process.
In July, the two rivals met for the first time in a decade and agreed to hold talks about forming a coalition government.
Mr Tsvangirai is due to go to West Africa on Friday to lobby the region's leaders to put more pressure on Mr Mugabe.
The MDC leader gained more votes than Mr Mugabe in March elections but official results show he did not pass the 50% threshold for outright victory.
The MDC leader pulled out of the June run-off, saying 200 of his supporters had been killed and 200,000 forced from their homes in a campaign of violence led by the army and Zanu-PF militias.
The ruling party has denied the claims and accused the MDC of both exaggerating the scale of the violence and being responsible for it.
Numerous human rights reports have backed the opposition claims.
Last week, MDC chairman Lovemore Moyo was elected speaker of parliament, where the MDC has a majority following the March general elections.
The MDC had said parliament should not be opened until a power-sharing deal was finalised.