Both sides called their supporters on to the streets on Thursday (8 August), while Morsi supporters in two protest camps in Cairo strengthened sandbag-and-brick barricades in readiness for any action by security forces.
Acting President Adli Mansour, in a message on the eve of the Muslim Eid al-Fitr holiday, said Egypt was in critical circumstances. The interim government would press on with its own plan to hold new elections in nine months, he said.
"The train of the future has departed, and everyone must realise the moment and catch up with it, and whoever fails to realise this moment must take responsibility for their decision," he said.
European Union envoy Bernardino Léon stayed on in the capital in the slim hope of reviving the effort, while his American counterpart, William Burns, headed home after days of trying to broker a compromise between the government and Morsi's Muslim Brotherhood.
But Brussels and Washington said they were very concerned that the Egyptian parties had not found a way to break what they called a dangerous stalemate.
EU, US express concern
"This remains a very fragile situation, which holds not only the risk of more bloodshed and polarisation in Egypt, but also impedes the economic recovery, which is so essential for Egypt's successful transition," EU foreign policy chief Catherine Ashton said in a joint statement with US Secretary of State John Kerry.
The army ousted the Islamist Morsi, Egypt's first freely elected leader, on 3 July after huge street demonstrations against his rule.
Morsi and leaders of his Muslim Brotherhood have been rounded up and detained. But thousands of their supporters have demonstrated to demand his reinstatement.
Nearly 300 people have been killed in political violence since the overthrow, including 80 Morsi supporters shot dead by security forces on July 27.
Mansour has blamed the Muslim Brotherhood for the breakdown of the international mediation effort, and for any violence that might result, while interim Prime Minister Hazem el-Beblawi accused protestors of inciting violence and he warned that any further violence would be met "with utmost force and decisiveness."
Muslim Brotherhood spokesman Gehad El-Haddad, asked about the threat, told Reuters: "This means they are preparing for an even bigger massacre. They should be sending us positive signals, not live bullets."