Most London bus workers are due to go ahead with a strike despite a High Court injunction granted to three companies involved in a dispute over Olympic payments.
The walkout by thousands of members of Unite in pursuit of a £500 payment for working during the Games will cause travel chaos in the capital.
Bus companies Arriva, Metroline and London General were granted an injunction by Mr Justice Supperstone preventing Unite members they employ from going on strike. But Unite said its members at 17 other bus firms will press ahead with a 24-hour walkout. It is understood that the workers going on strike represent about 85% of the total workforce.
Peter Hendy, London's transport commissioner, said: "It is, and always has been, for the bus companies and Unite to resolve this dispute. Given their inability to do so, the mayor obtained - unprecedentedly - £8.3 million from the Olympic Delivery Authority.
"This would allow every bus driver in London in a garage where one or more routes were affected by the 2012 Games to gain, over the 29 days of the competitions, about £500.
"As I understand it, the bus companies made three offers to supplement this with more of their own money, but the Unite leadership have refused to budge from their position of £500 after tax for everybody, and indeed have asked for more during the course of the negotiations. The union leadership have also refused to defer the strike to give time for further negotiations or for any of the offers to be put to their members.
"The mayor has made it clear that the money he obtained from the ODA is only available if there is no strike. Our message to London's bus drivers is: you should work normally and, if you do, the extra money brokered by the mayor is still available."
Talks were held all day at the conciliation service Acas but failed to break the deadlock.
Mayor of London Boris Johnson said: "I am saddened, disappointed and enormously frustrated that despite brokering £8.3 million of funding, union leaders and the private bus companies have this evening failed to reach agreement, and as a result it looks likely that Londoners will face unnecessary and needless disruption tomorrow.
"It seems to me that some militant union leaders remain hell-bent on strike action, and that is wholly unacceptable. I want the people of London, and our honest and hard-working bus drivers to know that we've gone the extra mile, money is on the table, this offer is fair, but it is also conditional on drivers not taking strike action."