Greek Socialist leader Evangelos Venizelos has rejected joining a coalition led by a leftist party opposed to an international bailout.
However, said he would continue efforts to form a government when he receives a mandate from the country's president.
After meeting with Left Coalition leader Alexis Tsipras, Venizelos said:
"At the current stage we cannot reach a deal, but must continue the effort."
New elections are on the horizon for Greece, as it looks as though the country's patchwork of parties cannot form an administration.
Greece faces weeks of political turmoil as conservative leader Antonis Samaras fails to form a coalition government.
A resounding rejection of the political status quo in Greek and French elections has thrown Europe's economic recovery off balance