Greek conservative leader Antonis Samaras, whose party came first in last weekend's elections that produced a hung parliament, has not reached an agreement for a coalition government with the head of the runner-up Radical Left Coalition.
Mr Samaras said he explained to Radical Left leader Alexis Tsipras that his demands for Greece to reject the country's international bailout deal would lead Greece into bankruptcy.
Mr Samaras reiterated that he was prepared to even back a minority government on condition that the country remain in the euro.
The conservative leader said Mr Tsipras' demands meant he was asking Samaras "to accept Greece's exit from the euro and the country's bankruptcy. I will not do that".
Mr Tsipras later confirmed he had failed to forge a coalition that would end the country's post-election deadlock.
Mr Tsipras said that despite his best efforts since receiving the mandate on Tuesday, he was unable to raise enough support to form a government. He said he will return the mandate to president Karolos Papoulias.
The 38-year-old's party was the surprise runner-up in Sunday's national elections, which hammered mainstream politicians but left no party with enough seats in parliament to govern alone.
The mandate will now pass to the third-placed Socialists. If no coalition deal is reached, new elections will have to be held.