The police authority for Wales' largest force says it cannot support plans to merge all four of Wales' forces.
Police forces in Wales have until 24 February to agree to a merger
South Wales Police Authority joined its counterparts for North Wales and Gwent Police in failing to back merger plans.
Home Secretary Charles Clarke has given forces until 24 February to agree to the proposals, aimed at reducing Wales and England's current 43 forces.
South Wales' chief constable Barbara Wilding supports the merger but the authority has questioned its funding.
Following a meeting of South Wales Police Authority on Monday, the body said it could not agree to voluntarily merge with Wales' three other forces.
Authority chairman Ray Thomas said the main concern was finance.
"We do not want the people of south Wales to shoulder the financial burden, and we will refuse to voluntarily merge until we know that this will not happen.
"Previous concerns raised with the home secretary... have been satisfactorily answered.
"Start-up costs and equalisation of council tax questions, however, still need to be resolved."
The authority is due to meet again before 24 February, but Mr Thomas said agreement for a merger would not be given unless it received assurances on funding.
He added: "We believe that we run a very prudent service in south Wales. Of all four police forces, we currently have the lowest council tax precept in Wales, by a relatively large margin.
Home Secretary Charles Clarke wants to reform policing
"I am a council tax payer, as we all are, and my police authority will not agree to a large council tax increase next year simply to facilitate restructuring.
"We are in close discussion with the Home Office regarding these issues.
"However, until the time when all our questions have been answered, we cannot jump blindly towards a merger."
Plans for the radical restructuring of the 43 forces in Wales and England were revealed last September when the Inspectorate of Constabulary described police structure as no longer "fit for purpose".
The UK Government has argued that Wales' four forces - all with fewer than 4,000 officers - are too small to deal with major crimes such as international terrorism.
Barbara Wilding, chief constable of South Wales Police, has said she is in favour of a merger.
She said: "Operationally, it makes absolute sense that we should have integrated all our intelligence, all our structures, all our training."
But the plans have met opposition from three of Wales' four police authorities.
Last week, Gwent and North Wales Police authorities outlined their opposition, citing concerns over funding and community policing.