Spokesman Filipo Tarakinikini told local radio he is planning for a military administration following the breakdown of negotiations with rebel leader George Speight.
"We can continue to carry on for the next two years," he added.
Colonel Tarakinikini had earlier said talks with the rebels had "hit a wall".
The rebels suddenly released four women hostages on Sunday in what they said was an act of goodwill.
But they continue to hold 27 captives at the parliamentary complex, including Fiji's first ethnic Indian prime minister, Mahendra Chaudhry.
One of the released hostages, Marieta Rigamoto, said they had been treated relatively well during their ordeal, but had been frightened.
Demands
A deal to end the five-week crisis had been due to be signed by the military and rebels on Saturday.
But hopes were dashed by fresh demands from Mr Speight. He is now insisting the new president be selected by the rebels.
The military says the choice should be made by Fiji's indigenous leaders, the Great Council of Chiefs.
Power
The hostage crisis began on 19 May when Mr Speight and his gunmen stormed parliament, proclaiming power for indigenous Fijians.
They want to strip power from Fiji's ethnic Indians, who make up about 44% of the 812,000-strong population.
Before talks reached a deadlock on Sunday, the army had already agreed to Mr Speight's demands to oust Mr Chaudhry and throw out the constitution.
Military negotiators blamed the latest stalemate on "the endless list of demands" from Mr Speight.
"Mr Speight and his group believe that they can ... extract from us every last ounce of concessions that they can possibly get," Colonel Tarakinikini said. "We are not prepared to allow that to happen."
He said the release of the women as a positive sign and a relief, but described the talks as a crooked path which was very difficult to negotiate.
The four hostages released on Sunday were taken under heavy police escort first to see relatives, then to trauma specialists for medical check-ups and counselling.
Deal
Negotiations between the military and rebels have broken down several times since the armed forces took control of Fiji on 29 May following the attempted coup.
Any final deal is expected to involve the release of the captives, the formation of an interim civilian government and an amnesty for the rebels.
Many in the Indian minority are scrambling to leave the country and the economy is in a downward spiral.
Australia, New Zealand and the United States have threatened economic sanctions if democracy is not restored.