The presidency, in a statement, said talks between Western and Arab diplomats, and the Muslim Brotherhood have failed, adding the Islamist party and its allies bear "full responsibility for the failure and what will follow."
Interim President Adly Mansour and the country's powerful army have been talking to diplomats from the US, EU, Qatar and the UAE.
Supporters of Morsi have been staging sit-ins in Cairo and Giza as well as daily rallies demanding his reinstatement.
"Diplomatic efforts ended today. The state gave room for all necessary efforts to be exhausted in order to urge the Muslim Brotherhood and its supporters to reject violence, prevent bloodshed and cease the disruption of Egyptian society by holding its future hostage," the presidency said.
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Accompanied by an EU representative and Gulf foreign ministers, US Deputy Secretary of State William Burns had visited the Brotherhood's number two leader Khairat El-Shater in high security Tora prison on Monday.
El-Shater is being detained on charges of inciting violence against protesters during Morsi's time in power.
The interim government is under increasing pressure to release 61-year-old Morsi, who has been held incommunicado at an unknown location by Egypt's military since his ouster.
The deposed president faces charges of espionage and jailbreak, which were officially filed in the early weeks of his detainment.
The US and EU have repeatedly called for Morsi's freedom.
The military has limited Morsi's interaction with foreign officials, allowing only a delegation from the African Union and EU foreign affairs Chief Catherine Ashton to meet with the ousted president.
US senators John McCain and Lindsey Graham, in Cairo to meet with Egypt's leadership, made statements yesterday urging for Morsi's release and an "inclusive political process" in Egypt.