Pakistan's president General Pervez Musharraf says cricket is trivial compared to wide issues dividing his country and India.
The two teams did play each other during the World Cup
In recent months, both sides have shown a willingness to put aside political tensions between the two countries.
And Musharraf had expressed an interest in the resumption of cricket tours, but has appeared to change his stance.
"I would like cricket and all sporting ties to resume. But cricket is a trivial issue," Musharraf said.
"Let me tell you that my players don't want to play with India."
Outside of multinational events, Pakistan and
India haven't met on the cricket field since Pakistan toured India in 1999.
The only encounters since have been
in the Asia Cup in 2000 in Bangladesh and in the World Cup
in South Africa in March.
The Press Trust of India reported on Thursday negotiations to resume competition had stalled.
It quoted an unnamed cricket official, who said: "After those few days of excitement, there is a general despondency in the two camps as we seem to be heading nowhere."
The last two months have seen politicians and cricketers alike discussing the chances of restoring cricketing ties.
Tentative tour plans were even discussed by the countries' cricket boards.
One-day internationals were to be held in each nation in September, followed by a full series in Pakistan in February 2004.
But the PTI's source said: "At the moment, I doubt if we could have any cricket between the two countries in September.
"But we cannot afford to be lax and want to keep everything in place should we get positive signals from the government.".
Unlike its Indian counterpart, the Pakistan Cricket Board is suffering a financial squeeze from cancelled tours and needs to play as much cricket as reasonably possible.