In the clearest sign yet that the dialogue is now destined for failure, negotiators from both sides failed to meet face-to-face after travelling to South Africa to meet the mediator, President Thabo Mbeki.
MDC spokesman Mr Nelson Chamisa told the media: "All the negotiating teams are back.
"Nothing was achieved in the latest round of engagement in South Africa to break the deadlock. We remain where we were."
Although none of the parties are talking about the way forward as they are sworn to secrecy on the progress of the dialogue, speculation is rife that Mr Mugabe was asked to wait for another week before appointing a cabinet.
This will give the mediator time to hammer a compromise deal after opposition Movement for Democratic Change (MDC) leader, Mr Morgan Tsvangirai rejected a proposed Southern African Development Community (SADC) sponsored settlement that could have seen him become a ceremonial prime minister.
However, Zanu PF insists that it is not prepared to make more concessions, while the opposition says it would rather go back "to the trenches" rather than let Mr Tsvangirai to assume a ceremonial post.
"The talks are long dead," Dr Lovemore Madhuku, a constitutional expert and political analyst told the media at the weekend. "There is nothing coming out of those discussions.
"They are just wasting time. They should just go public and say that the talks have collapsed."
The MDC says President Mugabe has already undermined the dialogue by convening parliament and appointing provincial governors, which were on the agenda for the talks.
The appointment of a cabinet, which the government says would be "soon", is seen as the potential "deal breaker"
But the MDC remains "cautiously optimistic" that the talks could yield an agreement, keenly awaited by millions of Zimbabweans hard hit by an unprecedented economic recession characterised by the world’s highest rate of inflation.
"There will be no agreement between Zanu PF and the MDC, not in the immediate term," said Professor Eldred Masungure, a lecturer at the University of Zimbabwe. "Zanu PF has dug in and is not prepared to cede more power and I see the same in the MDC."
The talks, viewed as the only solution to Zimbabwe’s multifaceted economic and political crisis first reached a deadlock two weeks ago over who between Mr Mugabe and Mr Tsvangirai should control a unity government.
At the weekend state media reported that the MDC suggested that Mr Mugabe and Mr Tsvangirai should jointly chair cabinet but Zanu PF found the idea to be "not just as insolent, but also stunning ignorance on how government works."
The MDC leader had insisted that he must given the post of executive prime minister with Mr Mugabe serving as ceremonial president, but has apparently toned down that demand by suggesting that he and Mr Mugabe should co-chair cabinet.
In a revealing interview with weekly Standard newspaper, Mr Tsvangirai said he believed that he made enough concessions to Mr Mugabe for the sake of progress but he was rebuffed.
"Fully aware that we won the March 29 election, we could have demanded nothing but outright victory," he said. "But we reached a position where we said it was important for cohabitation with Zanu PF for the sake of the country.