A hearing on the settlement is scheduled for 18 February
The US Department of Justice has said that it is still not satisfied with a deal that would allow search giant Google to build a vast digital library.
It said the plan failed to address antitrust and copyright concerns.
It echoes objections by online retailer Amazon, which has said that Google's plan to scan and distribute millions of books online could lead to a monopoly.
Google were forced to amend details of the plan in 2009 after objections by the Department of Justice (DoJ).
"The amended settlement agreement still confers significant and possibly anti-competitive advantages on Google as a single entity," the DOJ said.
It said that the agreement would allow the Google to be "the only competitor in the digital marketplace with the rights to distribute and otherwise exploit a vast array of works in multiple formats".
Google Books - formerly known as Google print - was first launched in 2004. It was put on hold a year later when the Authors Guild of America and Association of American Publishers sued over "massive copyright infringement".
In 2008 Google agreed to pay $125m (£77m) to create a Book Rights Registry, where authors and publishers could register works and receive compensation for scanned books.
A decision on whether the deal could go through was originally scheduled for October 2009. But, District Judge Denny Chin, presiding over the trial, sent the deal back to the drawing board after objections from around the world, including criticism by the DoJ.
The DoJ has once again waded into the debate.
It says the proposed settlement posed potential copyright and antitrust issues.
It also criticised the agreement for requiring authors to opt out of having their books included in the deal, rather than opting in.
It also said that authors and representatives of the publishing industry who had brokered the deal had inappropriately spoken for foreign authors and for authors of "orphan works".
Orphan books - of which there are thought to be five million - are titles where the authors cannot be found.
The DoJ said that Google's exclusive access to these orphan works "remains unaddressed, producing a less than optimal result from a competition standpoint."
But Google said that the Department of Justice's filing recognised "the progress made with the revised settlement".
"It once again reinforces the value the agreement can provide in unlocking access to millions of books in the US," it said.
"We look forward to Judge Chin's review of the statement of interest from the Department and the comments from the many supporters who have filed submissions with the court in the last months."
A hearing on the settlement has been scheduled on 18 February.