The Gulf Co-operation Council has suspended its effort to mediate in Yemen's political crisis, after President Ali Abdullah Saleh has refused to sign a deal to step down.
State TV said he would only sign in the presence of opposition leaders, who had signed the agreement on Saturday.
The deal would have seen him resign within 30 days and have immunity.
A statement from the GCC said it was suspending its initiative because of "a lack of the suitable conditions".
Meanwhile, foreign diplomats had to be airlifted out of the United Arab Emirates embassy in Sanaa, which was besieged by Saleh supporters.
On Sunday, anti-government protesters also staged demonstrations in the Yemeni capital.
President Saleh refused to sign the deal unless opposition representatives were present at the ceremony at his palace, state TV said.
It later showed some leaders of Mr Saleh's ruling party signing the accord. But the president did not sign.
Earlier on Sunday, the US, European and Arab ambassadors remained trapped for hours in the UAE embassy in Sanaa.
They were eventually flown out by helicopters to the presidential palace.
In Sanaa, Mr Saleh's supporters rallied against the deal.
"We reject signing the Gulf initiative and the coup against his legitimacy," they shouted.
Separately, tens of thousands of anti-Saleh protesters demonstrated in the city, calling on the president to leave immediately.
They have threatened to step up their campaign by marching on government buildings - a tactic that has led to bloodshed in recent months.
The opposition says more than 140 people have been killed by security forces and militiamen since the unrest began in January.
The deal calls for Mr Saleh to step down after 33 years in office and hand over power to a unity government within a month.
It also gives the president immunity from prosecution.
Last month he backed out of signing such a deal at the last minute.
Many protesters - inspired by the successful revolts in Tunisia and Egypt - say the accord does not go far enough, and are calling for Mr Saleh's immediate departure.