Hopes of averting an eight-day strike by firefighters faded tonight after union leaders said they had been made an "unacceptable" pay offer of 4% with any more linked to modernisation.
The employers said the deal was worth 16% in return for an agreement to modernise the fire service, although these further increases were conditional on changes which had yet to be discussed.
The Fire Brigades Union's (FBU) general secretary, Andy Gilchrist, said the offer only guaranteed a pay rise of 4%. The FBU is seeking a 40% pay increase. "The strike is most certainly on," he said.
Talks were continuing, but time was running out on any hopes of calling off the industrial action that is planned to start at 9am tomorrow.
The new finalised offer to the FBU by local authority employers came after several hours of talks. Union leaders say they fear talk of modernisation will lead to job cuts.
Hopes had raised overnight of a breakthrough as it had been expected that the proposed deal would be worth a guaranteed 16% which would boost the pay of firefighters from £21,500 to £25,000 outside London, and £28,000 in the capital.
Mr Gilchrist made it clear to employers that their offer was "unacceptable".
Later, the deputy prime minister, John Prescott, appealed in the Commons for the FBU to call off tomorrow's strike, "even at this late stage" and urged them to carry on "talking, not walking".
He said the offer amounted to an increase of 16% over two years, linked to modernisation and that the FBU's 40% pay claim which would "put at risk the economic stability we have worked so hard to achieve".
Mr Gilchrist, accompanied by the union's president, Ruth Winters, and assistant general secretary Mike Fordham, had been holding private talks with three officials from the local authority employers, including their chairman, councillor Ted George.
John McGhee, one of the union's national officers, said: "It seems to us that someone somewhere is trying to engineer an eight-day strike. We have always said we were prepared to consider a serious offer.
"But all we have been offered so far is an increase of 4%, not a penny more, with any more money having to come through modernisation."
Mr McGhee said the union would not walk away from talks, but he made it clear that the expected offer of 16% had not been tabled today. "To say we are disappointed would be the biggest understatement of the year. Our patience has been stretched to the absolute limit and our members will be furious."
Another union official said firefighters across the country would feel "angry and bitter" about the offer made today.
The union's executive had waited at a London hotel throughout the morning expecting to be called to resumed negotiations. Then the three senior officials suddenly left by taxi at lunchtime to meet the top three officials from the employers' side.
However, it became clear during the day that there was a gap between what local authority employers could afford to pay and the cost of any proposed deal.
Sir Jeremy Beecham, chairman of the local government association, said he believed there would be cash savings from modernising the service, as well as cost benefits, but that would not be enough to meet the entire bill.
"I would hope, therefore, that the government would be sympathetic to the need to bridge the gap." But the government held firm by continuing to insist it would provide no extra money to settle the dispute.
Downing Street made clear that ministers were deeply sceptical about how such an offer could be funded without breaching public spending limits - something they have vowed not to do.
Mr Blair's official spokesman said: "The potential impact of awarding hyper-inflationary pay of the sort that is being talked of, where there is no change, will have a very damaging impact on the wider economy. It will lead to people losing their jobs. It will lead to inflation going out of control. It will lead to higher interest rates."
Meanwhile, police across the UK today said they would refuse a government request to cross picket lines during the firefighters' dispute.
The Association of Chief Police Officers said officers had "no part to play" in going across lines to commandeer engines from fire stations.
Military green goddess vehicles will again be used to provide emergency cover if the strike goes ahead tomorrow.
