At a summit in London led by Brexit Secretary David Davis and Cabinet Office minister David Lidington, ministers from Scotland and Wales rejected a proposed amendment to the EU Withdrawal Bill, saying it does not go far enough to protect devolution.
Scottish Brexit minister Michael Russell said more work was needed, and said it was “likely that there will require to be that discussion” between the Prime Minister and the First Minister if a deal is to be reached.
Scottish Secretary David Mundell said another summit would take place “in very short order” but added that he was hopeful a deal would be reached in time.
The Scottish and Welsh governments have said they will reject legislative consent for the bill, which would ensure legal continuity for thousands of EU regulations after Brexit.
“We do not have an agreement and we do not have an amendment,” Mr Russell said, emerging from the meeting at the Cabinet Office on Whitehall.
“I have no idea how close we are to an agreement, because that will depend on how the UK Government thinks about and takes forward the points that have been made by Wales and Scotland today.
“The very clear point is that neither Wales nor Scotland can go or will go to their parliaments and recommend the diminution of devolved powers.
“That will not happen. There will be no legislative consent if that continues.
“If there is a proposal that does not do that, that accepts the equality around the table then we might make some progress. But there will be another meeting.”
Mr Mundell said: "I think the UK Government has demonstrated by bringing forward the draft of an amendment that we are showing flexibility, and are addressing the concerns that both the Scottish government and Scottish Parliament have raised."
Confirming that another summit would be held within the next three weeks, the Scottish Secretary added: "I hope that that meeting can conclude with the sort of agreement that we’re looking for, so that when we lodge our amendment in the House of Lords it can have the agreement of both the Scottish and Welsh governments.”
Mr Russell confirmed that a Continuity Bill, which will assert the Scottish Parliament’s authority over 111 powers in devolved areas being repatriated from Brussels, would be introduced at Holyrood before the end of February.
The Welsh Government is also pushing ahead with its own Continuity Bill, in a direct constitutional challenge to Westminster.
Mr Russell warned that option was “very close”, but added: “Quite clearly, if we were to find an agreement during this process, then the Continuity Bill, which is the less desirable option that we have, would fall by the wayside,”
Asked if the heads of government would have to meet to thrash out a final deal, he added: “I think it is likely that there will require to be that discussion, but I don’t think we’re at that stage quite yet, because there has to be something to discuss, and there is no such agreement.”
With Mr Davis and Mr Lidington going directly to a UK cabinet away day at Chequers to settle its Brexit stance, Mr Russell said both devolved delegations had made “utterly clear we want out of this situation… single market membership, customs union membership, and nothing less.”