Lebanese Prime Minister Mustapha Adib has abandoned his efforts to form a new government amid popular demands for reform.
Mr Adib gave no details, but reports indicate that the difficulties have centered on Shiite parties seeking to control the finance ministry and choose ministers in the cabinet.
Lebanon – long divided along sectarian lines – is in an acute economic crisis.
He is reeling from last month’s massive explosion in Beirut that killed at least 190 people and injured 6,000.
The previous Lebanese government resigned amid widespread anger over the explosion, which devastated parts of the capital.
The cause of the disaster was the detonation of 2,750 tons of ammonium nitrate that had been stored unsafe in a warehouse at the city’s port for six years.
The World Bank has estimated that the explosion caused up to $ 4.6 billion (£ 3.4 billion) in damage to buildings and infrastructure.
French President Emmanuel Macron urged Lebanese political factions to quickly form a new government.
Mr Macron has offered to host an aid conference in mid-October to help.
Why did Mr. Adib resign?
Mustapha Adib, former Lebanese Ambassador to Germany, was appointed to the post on August 31.
He said he wanted reforms to start immediately and a bailout from the International Monetary Fund.
But the Sunni Muslim politician appears to have struck a stumbling block with the main Shia Muslim blocs in the Lebanese parliament.
Analysis: no change without international pressure?
By Lina Sinjab, BBC Middle East Correspondent, Beirut
The resignation of Mustapha Adib is not a surprise.
He had the support of a majority in parliament and the backing of Emmanuel Macron.
But the Shiite parties – especially the Amal movement and Hezbollah – still have the upper hand in politics and the economy in Lebanon, due to their influence in many key sectors, including security and finance, and absence of an equally strong Sunni bloc.
Critics say that despite the country’s economic collapse and a near bankrupt state, the two Shiite movements are increasingly concerned with protecting their own interests.
Many believe that without international pressure and the threat of freezing the assets of Lebanese politicians abroad, no one here will make concessions for real change.
Mr Adib reportedly insisted on forming a cabinet of technocrats, while political factions wanted the right to appoint ministers.
After meeting with President Michel Aoun on Saturday, Adib said he “apologized” for the task of forming a government.
He apologized to the Lebanese people for their “inability to fulfill their aspirations of a reformist team” to save the country, but added that he did not want to lead a cabinet that “was doomed to failure.”
An anonymous source close to the French president told Reuters news agency that France would not let Lebanon down.
“Adib’s resignation amounts to ‘collective betrayal’ on the part of Lebanese political parties,” the source added.
What is the situation in Lebanon?
Anti-government protesters staged mass rallies for nearly a year, calling for a complete overhaul of the political system.
Power is largely based on the country’s sectarian interests, and successive governments have been accused of ineffective and elitist leadership.
Political appointments and many jobs depend on membership in one of the myriad of Lebanese religious communities, a situation that has led to endemic favoritism, cronyism and corruption.
Even before last month’s explosion, the country was in great financial trouble as the currency collapsed, unemployment soared and poverty increased.
Learn more about the explosion in Beirut
What role does Emmanuel Macron play?
The French president visited Lebanon earlier this month and pressured political parties to agree on an apolitical cabinet that would start rebuilding the country and fighting corruption.
Mr Macron also said he would consider suspending financial aid or imposing sanctions on the ruling elite if there was no real change in the next three months.
He called for credible commitments from party leaders, including a timetable for implementing reforms and legislative elections within six to 12 months.
The French leader fully supported Mr. Adib.
After Saturday’s announcement, senior Sunni politician and former Prime Minister Saad al-Hariri warned that “those who applaud the collapse of French President Emmanuel Macron’s initiative” will “bite their fingers in regret.”
Lebanon came under French control 100 years ago after the Ottoman Empire was defeated in World War I. The country declared its independence in 1943.