Jeremy Corbyn is likely to face a challenge to his leadership after his deputy pulled out of crisis talks with unions on the issue saying there was "no realistic prospect of reaching a compromise".
Tom Watson said that Mr Corbyn's refusal to step down mean there was no hope of breaking deadlock over his future.
Mr Corbyn is facing a major rebellion from MPs which have seen him lose a motion of confidence and face down scores of resignations from his front bench.
Today he called for the party to "come together" after maintaining that he would not go and has the backing of party members.
Watson, who has been playing peacemaker, had arranged talks with the largely pro-Corbyn unions in the hope of reaching an impasse.
It now leaves the path clear for likely leadership challenger Angela Eagle to take a lead in ending the deadlock.
Mr Watson said Mr Corbyn's declaration that he would continue "come what may" meant "there is no realistic prospect of reaching a compromise" over his future."
He added that any leader must command the support of both the members and the MPs in the Parliamentary Labour Party (PLP)
"It is clear to all that Jeremy has lost the support of the PLP, with little prospect of regaining it," he said.