Kenya is polarised by conflicting loyalties to the two leaders
Allies of Kenyan Prime Minister Raila Odinga have said they will boycott cabinet meetings until a dispute with President Mwai Kibaki has been sorted.
The two men clashed on Sunday after Mr Odinga suspended two ministers accused of corruption - only for Mr Kibaki to reverse the decision hours later.
A spokesman for Mr Odinga's party says the prime minister can no longer function properly in the government.
The two rivals formed a coalition to end riots following the 2007 election.
Some 1,300 people died in the violence and tens of thousands were displaced.
The BBC's Will Ross in Nairobi says vital reforms, intended to prevent a repeat of the post-election violence, have not been put in place yet.
And he says the current situation is worrying because there is a risk of the coalition government collapsing if the dispute is not resolved.
The US ambassador, Michael Ranneberger, has called on both leaders to work together to tackle corruption.
"My government feels very strongly that this is a time for dialogue in the interest of the nation, not a time for finger-pointing or mutual recrimination," he said.
"At the same time it is important for everyone to avoid manipulating ethnic tensions."
Mr Odinga and Mr Kibaki are from different ethnic groups, a divide which fuelled the 2007 violence.
On Monday, Mr Odinga called for former UN Secretary-General Kofi Annan to intervene in the dispute
But the political situation is further complicated for Mr Odinga, because his own party - the Orange Democratic Movement - is split.
Some members are expressing solidarity with Agriculture Minister William Ruto - one of the ministers Mr Odinga tried to suspend.
Mr Ruto, under suspicion after a recent audit into a maize scandal revealed that $26m (£16.5m) had gone missing, was an ally of the prime minister but the pair are now fierce rivals.
Education Minister Sam Ongeri, from Mr Kibaki's Party of National Unity, was targeted for suspension after more than $1m earmarked for schools went missing.