The Liberation Tigers of Tamil Eelam (LTTE) refused to negotiate with Sri Lanka's government last week after travelling to Oslo.
Diplomatic sources say Norway is now looking for an exit after spending six years attempting to broker peace in the island nation.
A landmark truce that Oslo helped to negotiate in 2002 is now in shreds, according to Scandinavian monitors.
"There is at the present time no room for a Norwegian initiative in the peace process," Norwegian envoy Erik Solheim told AFP in Oslo last week after failing to get the Tigers to negotiate.
A diplomat close to the process said that Norway may now reconsider its role.
"We are not going to see the start of political talks soon. The focus will be on re-establishing contacts," he said.
Oslo has given the two sides 10 days to respond positively or go their own ways.
The Tigers used the aborted talks as a platform to renew their call for "self determination.
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They are demanding outright independence or power-sharing in