Serbian and ethnic Albanian leaders are deadlocked over the future status of Kosovo, United Nations special envoy Martti Ahtisaari has said.
The UN has kept the lid on simmering tensions in Kosovo
Speaking in Vienna at the final round of talks on the fate of the UN protectorate, Mr Ahtissari said he did not see any prospect of an agreement.
The focus is a set of UN proposals which would give Kosovo all the trappings of an independent state.
Albanians broadly accept the plan, but Serbia opposes independence for Kosovo.
The province has been administered by the UN since a Nato bombing campaign in 1999 ended a violent Serb crackdown against ethnic Albanians, some of whom had taken up arms.
Mr Ahtisaari unveiled his proposals for Kosovo earlier this month.
They would give Kosovo its own constitution, flag and national anthem and the right to apply for membership of international organisations.
The territory - which is still legally part of Serbia - would remain under close international supervision.
Serbia claims the plan paves the way for an independent Kosovo, something desired by its majority Albanian population but strongly opposed by Serbia.
"On the status issue... nothing has indicated that the parties will be moving in a different direction," Mr Ahtisaari said during a break in the talks.
The special envoy has said he will present his final set of proposals to the UN Security Council in the second half of March, whether or not an agreement is reached.
It will then be left to the Security Council to approve or reject the plan.
The latest round of talks is scheduled to last about 10 days. It is an opportunity for both sides to go through the 58-page blueprint point-by-point.
There are a whole range of practical matters to discuss relating to Kosovo's future, such as protection of the Serb minority and property of the Serb Orthodox Church, the devolution of powers to municipal authorities and the settlement of various financial claims.
The BBC's South-East Europe analyst, Gabriel Partos, says the signs are that the real diplomatic struggle for Kosovo's future will take place only after the Vienna talks.
Western support for the UN blueprint is opposed by Russia, which insists that any deal needs to be accepted by both the Kosovo Albanians and Serbs.
Mr Ahtisaari's deputy, Albert Rohan, said: "We have to differentiate: we are pessimistic as far as the status itself is concerned, and we are totally open and hopeful that there will be fruitful discussions on all these practical matters".
Many observers are doubtful even in relation to these subsidiary matters, our analyst writes.
Discussions over the past year have produced few results apart from some progress - though no agreement - on providing protection for the historic buildings of the Orthodox Church.