Mediators in talks between Kosovo and Serbia have concluded that no agreement can be reached on Kosovo's final status ahead of a UN deadline on 10 December.
Nato troops have been stationed in several flashpoints in Kosovo
The troika of the EU, US and Russia spent 120 days trying to broker a deal.
Kosovo is still a province of Serbia, but ethnic Albanian leaders there have threatened to declare independence unilaterally after the deadline lapses.
Nato - fearing a violent Serb reaction - has said it will keep 16,000 troops in Kosovo to deter any clashes.
"After 120 days of intensive negotiations, the parties were unable to reach an agreement on Kosovo's status," the troika said in a report obtained by the BBC.
"Neither party was willing to concede its position on the fundamental question of sovereignty on Kosovo," the report concludes.
Kosovo's independence ambitions have the broad backing of the US and several EU nations.
Foreign ministers from Britain, Germany, France and Italy have written to their counterparts in fellow EU member states saying that the time for negotiation is over, and that the EU must honour its responsibilities to Kosovo.
The BBC's Oana Lungescu in Brussels says the letter stops short of supporting unilateral independence for Kosovo, but that any future declaration from Kosovan leaders will receive western backing.
Nato spokesman James Appathurai said "the Nato point of view is ... that the process should now move - that there needs to be movement towards resolution".
Earlier, Nato Secretary-General Jaap de Hoop Scheffer said Nato would "act resolutely against anyone who seeks to resort to violence".
But Russian Foreign Minister Sergei Lavrov has reiterated Moscow's demand for negotiations to continue beyond Monday.
Speaking in Brussels on Friday, Mr Lavrov said Serbia had "presented a whole series of specific proposals, compromise proposals" which merited further negotiations on Kosovo's status.
Risk of flare-up
The UN's top administrator in Kosovo, Martti Ahtisaari, has put forward a plan offering Kosovo "supervised independence".
The plan - accepted by the ethnic Albanians - would mean international agencies gradually steer Kosovo's institutions towards independence, while safeguarding the rights and property of the Serb minority.
But Russia has supported Serbia's stance at the UN Security Council, arguing that independence for Kosovo could provide dangerous inspiration for separatists elsewhere.
Nato was criticised after it failed to prevent riots by ethnic Albanians in 2004 in which Serbs were attacked. Nineteen people died in the violence.
Kosovo's Albanian leaders want nothing less than independence
The EU's mediator on Kosovo on Thursday criticised comments by Aleksandar Simic, an aide to Serbian Prime Minister Vojislav Kostunica, who said war could be a "legal tool" to resolve the Kosovo issue if other methods failed.
"I do hope this statement was not authorised. I expect it to be retracted," Wolfgang Ischinger said.
Though technically part of Serbia, Kosovo has been administered by the UN for the last eight years.
Belgrade's security forces were driven out of Kosovo by a Nato bombing campaign in 1999, launched to stop a violent Serb crackdown on ethnic Albanians.