Formula One Teams Association and the international racing federation FIA appear heading for a showdown as both parties stuck to their guns on Tuesday, three days before a deadline to complete the line-up for next season.
Many observers believe that this is a power struggle between FOTA chief Luca Cordero di Montezemolo, who is also Ferrari chairman, and FIA chairman Max Mosley.
At the enter of the dispute is a budget cap of 44 million pounds per team which Mosley wants to impose starting next season.
Although FOTA is in favor of cutting costs, it is opposed to a FIA plan to allow teams which spend below the cap technical advantages over the ones which spend more.
Both FOTA and FIA have said they want to avoid such a two-tier system but no compromise has been found.
Speaking on Tuesday, Montezemolo reiterated that Ferrari will not race under current rules for 2010 and said ''in May our board decided what our position would be and this has not changed. It is useless to continue these polemics. Everyone will make their own decisions''.
''We do not know why there is this desire to destroy Formula 1,'' he added.
FIA responded by accusing FOTA of attempting to take over Formula 1 regulations and to gain control of the sport's commercial rights.
FIA also accused FOTA and Montezemolo of undermining efforts aimed at achieving cost reductions.
The revolt against the FIA rules is being led by the so-called manufacturing teams - Ferrari, Renault, Toyota, BMW and McLaren-Mercedes - with the support of the other FOTA members, with the exception of Willians and Force India which have broke ranks and formally signed up for next season.
All the other FOTA members presented their applications for 2010 but said these were not valid under the existing rules.
On Friday, FIA issued a provisional list of the teams set to take part in the 2010 season and it had all the 2009 teams. However, FIA said that Brawn GP, McLaren, Renault, BMW Sauber and Toyota had to drop the conditions they set to take part in next year's season by June 19 decision in order to be allowed in.
Ferrari, as well as Red Bull and Toro Rosso, had set the same conditions as the other FOTA members but FIA said they were automatically signed up on the grounds that they had signed earlier accords which obliged them to compete.
The Italian team has contested this, claiming that 'automatic' signing up was unacceptable, and has already taken FIA to court over its alleged right to veto rule changes.